Canadian retirees are trying to find prime TSX dividend shares so as to add to their self-directed Tax-Free Financial savings Account (TFSA) portfolios. The latest pullback within the inventory market is giving traders an opportunity to purchase nice dividend shares at undervalued costs and decide up excessive yields to generate passive earnings.

Enbridge

Enbridge (TSX:ENB) trades for lower than $50 per share on the time of writing. That’s down from greater than $59 in June final yr.

The newest leg decrease is probably going as a result of considerations that Enbridge’s Line 5 pipeline would possibly get shut down, a minimum of quickly, as a result of potential dangers brought on by erosion close to the pipeline in Wisconsin. Line 5 carries gas that’s deemed important for the economies of Canada and several other American states. It’s unlikely the pipeline might be shut down, however the threat has traders anxious.

Ongoing volatility must be anticipated till the decide decides, however this may very well be an awesome alternative for dividend traders to choose up Enbridge inventory. The present annualized dividend yield is above 7%, and Enbridge will possible lengthen its 28-year streak of distribution will increase.

Enbridge generated stable first-quarter (Q1) 2023 outcomes. Adjusted earnings got here in at $0.85 per share in comparison with $0.84 per share in the identical interval final yr. Distributable money circulate (DCF) rose to $3.2 billion within the quarter in comparison with $3.1 billion in Q1 2022. Administration reaffirmed steerage for the yr and Enbridge expects to place $3.5 billion in new capital tasks into service in 2023 as half of the present $17 billion capital program. A latest settlement with main purchasers by way of 2028 ought to maintain the core Mainline pipeline system at or close to capability.

Given the regular outlook the drop within the share worth seems overdone.

Financial institution of Nova Scotia

Financial institution of Nova Scotia (TSX:BNS) is Canada’s fourth-largest financial institution with a present market capitalization close to $78 billion. The inventory is down significantly over the previous yr, falling from $86 in June to as little as $63. On the time of writing, the inventory trades close to $65.50 per share.

The Financial institution of Canada and the U.S. Federal Reserve have elevated rates of interest dramatically up to now yr to attempt to cool off an overheated financial system and produce the employment market again into stability to scale back inflation.

Financial institution traders are anxious that the measures will set off a pointy improve in mortgage defaults, as companies and households turn into overwhelmed by increased debt funds. Financial institution of Nova Scotia simply reported fiscal Q2 2023 outcomes that confirmed a big improve in provisions for credit score losses in comparison with the identical interval final yr, so the speed hikes are already hitting over-leveraged purchasers.

Financial headwinds persist and extra draw back is actually potential within the coming months. Nevertheless, Financial institution of Nova Scotia has sufficient capital to journey out the turbulence and continues to ship stable income. The board simply raised the quarterly dividend from $1.03 to $1.06, so administration can’t be overly involved concerning the profitability outlook.

Traders who purchase BNS inventory on the present worth can get a dividend yield of shut to six.5% from the brand new payout.

The underside line on prime TSX dividend shares for passive earnings

Enbridge and Financial institution of Nova Scotia pay engaging dividends that ought to proceed to develop. In case you have some money to place to work, these shares look undervalued as we speak and need to be in your radar for a portfolio targeted on passive earnings.