Canadian savers are utilizing their Tax-Free Financial savings Account (TFSA) and Registered Retirement Financial savings Plan (RRSP) to construct self-directed portfolios of prime TSX dividend shares. The market correction is giving traders an opportunity to purchase nice Canadian dividend shares at discounted costs.

Telus

Telus (TSX:T) trades for near $27 per share on the time of writing in comparison with greater than $34 on the excessive level final yr.

Rising rates of interest are making debt costlier, and this might scale back money obtainable for distributions. Telecom firms use debt as a part of their funding technique to pay for capital investments, so the steep rise in rates of interest over the previous yr could be one motive traders have pushed down the share value. Recession fears are additionally at play, though Telus will get most of its income from recession-resistant subscriptions to its web and cellular companies.

Telus generated stable first-quarter (Q1) 2023 outcomes. Working income elevated 15.7% in comparison with Q1 2022 and adjusted earnings earlier than curiosity, taxes, and depreciation (EBITDA) rose 10.7%. Free money circulation jumped practically 29% to $535 million. That is vital for dividend traders who search for companies with dependable streams of free money circulation to help payout will increase.

Adjusted web earnings slipped by 7% in comparison with the identical quarter final yr largely attributable to a leap in working bills of practically 23%.

For the complete yr, Telus expects adjusted EBITDA to rise not less than 9.5% and free money circulation is predicted to hit $2 billion. That’s in all probability extra vital to give attention to than the dip in adjusted earnings. As such, the pullback within the inventory value seems overdone.

Telus usually raises the dividend by 7-10% per yr. On the time of writing, the inventory gives a yield of 5.3%.

TD Financial institution

TD (TSX:TD) trades for near $82 per share on the time of writing. That’s down from the 2022 excessive round $109.

The inventory has been within the headlines so much over the previous yr. TD lately deserted its US$13.4 billion effort to purchase First Horizon, a regional financial institution within the southeastern a part of the US. Regulatory points apparently led to the collapse of the deal. Shareholders are in all probability relieved the takeover didn’t undergo after the chaos that has hit the American banking sector since March.

TD is now sitting on a large warfare chest of extra money that had been earmarked for the acquisition. Surplus money makes TD a safer wager heading right into a potential recession, however it additionally limits progress potential, and this could be why the inventory value has not moved a lot because the financial institution known as off the First Horizon deal.

Buyers may see an aggressive share-repurchase plan emerge and probably a pleasant bonus dividend or a beneficiant improve to the bottom payout. Analysts have blended views on whether or not TD will be capable to goal one other massive takeover south of the border, so a deal in one other market might be an choice whereas financial institution valuations are down.

Shopping for TD inventory on massive dips has traditionally confirmed to be a profitable technique over the long run. Compound annual dividend progress averaged greater than 10% over the previous 25 years, and extra positive aspects within the payout ought to be on the way in which.

On the time of writing, the inventory gives a 4.7% dividend yield.

The underside line on prime dividend shares for self-directed traders

Telus and TD are prime TSX shares with enticing dividends that ought to proceed to develop. You probably have some money to place to work, these shares need to be in your radar at present.