Market crash: the two main dividend securities to start a self-managed TFSA pension


The market crash of 2020 is one for the records.

Canada TSX index dropped more than 35% from February high to March low.

Volatility continues despite the anticipation of a significant Canadian and global economic slowdown. Businesses are already cutting jobs to protect cash flow, pending the arrival of government assistance.

Buying stocks during a stock market crash takes courage, but a quick look at the previous major corrections indicates that this might be the best time to invest. In the aftermath of the Great Recession, the crash of 1987 and even the Great Depression, the stock markets recovered.

Let’s take a look at the two main Canadian dividend stocks that currently appear to be oversold and which could be attractive choices for TFSA investors.


Telus (TSX: T) (NYSE: TU) is a leading player in the Canadian communications industry with wired and wireless networks providing television, Internet and mobile services across the country.

Confinement of the coronavirus forces many Canadians to work from home. The meetings have yet to take place and the children have to be entertained. This is driving growth in the use of broadband data. Phone sales could be hit hard during the recession, but Telus could show increased revenue in second quarter results on data plan upgrades.

Telus does not have a media division, so it is not directly affected by declining advertising revenues.

In recent years, the company has spent a lot to build its Telus Health division. The group is already the leading Canadian provider of digital solutions for doctors and hospitals. The coronavirus epidemic could lead to high demand for Telus Health products and services and could trigger an expansion of digital health after the epidemic has passed.

The company pays an attractive dividend which is growing at a steady pace. Investors who buy Telus today can get a solid 5% return.

The title is now trading at nearly $ 23 per share, against a peak adjusted for the division above $ 27 in February. The relatively modest decline is an indication of the revenue stream resisting the company’s recession. Once the market recovery is underway, Telus should return to the peak of 2020.

Royal Bank of Canada

Royal Bank (TSX: RY) (NYSE: RY) is Canada’s largest financial company in terms of market capitalization. The bank is also one of the top 15 in the world and is among the few considered too large to fail.

The bottlenecks put pressure on businesses and many businesses find it difficult to cover their expenses. The layoffs are hitting consumers hard as Canadians face record levels of personal debt. The rise in defaults will have an impact on the profits of the financial industry and Royal Bank will experience some pain.

However, the bank has a solid capital position and is very profitable. Government programs designed to keep businesses open and help consumers pay for their mortgages will mitigate the damage. The bank also receives assistance with the purchase of mortgages. The Canada Mortgage and Housing Corporation (CMHC) buys up to $ 150 billion in mortgages from banks to make sure they have the cash to keep lending.

Mortgage rates are not going down with falling interest rates or bond yields. This means that the big banks are earning higher margins than usual on new home loans and mortgage renewals.

The Royal Bank dividend should be secure. At the time of writing, the stock offers a dividend yield of 5%.

The essential

Telus and Royal Bank look cheap today and should be solid choices for a buy-back TFSA pension fund.

If you have cash, these actions deserve to be on your radar.

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Crazy contributor Andrew Walker has no position in the actions mentioned.


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