The market correction is giving dividend traders an opportunity to purchase prime TSX dividend shares at low cost costs for a Tax-Free Financial savings Account (TFSA) portfolio. Telus (TSX:T) and TD Financial institution (TSX:TD) are long-time favourites amongst retirees and different traders searching for passive revenue.

Telus

Telus is Canada’s second-largest communications firm with a present market capitalization close to $39 billion. The inventory trades near $27 per share on the time of writing in comparison with the 12-month excessive round $34.

A gentle slide over the previous 12 months has extra to do with the broader market correction than with any particular points on the firm. Telus generated strong ends in 2022. The corporate achieved 10% development in money circulation from operations and free money circulation jumped 64% in comparison with 2021 to virtually $1.3 billion.

Administration expects 2023 to ship robust outcomes. Working income development will probably be within the 11-14% vary with development in adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) anticipated to be 9.5-11%. The enterprise ought to generate $2 billion in free money circulation this 12 months. That’s all excellent news for dividend traders.

Telus usually improve the dividend by 7-10% per 12 months. The present payout gives a 5.1% yield.

TD Financial institution

TD constructed up a large pile of extra money throughout the pandemic and has determined to make use of the funds to make two strategic acquisitions in the US. The financial institution not too long ago accomplished its US$1.3 billion buy of Cowen, an funding financial institution, in a transfer that can beef up TD’s capital markets operations.

The bigger deal remains to be unfolding. TD initially agreed to buy First Horizon, a regional financial institution based mostly within the southeastern a part of the US, for US$13.4 billion. Traders are questioning if the acquisition will shut after the current turmoil within the banking sector despatched First Horizon’s share tumbling as a lot as 40% beneath TD’s buy value.

TD’s inventory fell previously few weeks amid the broader selloff in financial institution shares and is underneath added scrutiny from traders as a result of First Horizon deal and TD’s present American presence. TD already operates extra branches south of the border than it does in Canada. The current failure of two regional banks in the US is making traders nervous. If the First Horizon buy goes via, TD would change into a top-six retail financial institution within the American market.

TD trades close to $79 per share on the time of writing in comparison with $93 in February. Traders who purchase on the present value can get a 4.8% dividend yield.

The noise within the financial institution sector is distracting traders from TD’s strong begin to fiscal 2023. The financial institution reported adjusted internet revenue of $4.155 billion within the fiscal first quarter (Q1) 2023 in comparison with $3.833 billion in fiscal Q1 2022.

Is one a greater wager for TFSA passive revenue?

Telus and TD pay enticing dividends that ought to proceed to develop. The shares seem undervalued in the present day and each need to be in your radar for a buy-and-hold TFSA portfolio focusing on passive revenue. In the event you solely purchase one, Telus might be the safer wager within the close to time period as a result of ongoing volatility within the financial institution sector and the uncertainty round TD’s huge acquisition.

TD, nonetheless, doubtless affords higher upside potential for contrarian traders who don’t thoughts driving out some turbulence.