The most recent leg of the market correction is offering Tax-Free Financial savings Account (TFSA) traders with a chance to purchase prime TSX dividend shares at undervalued costs for portfolios centered on passive earnings.

Enbridge

Enbridge (TSX:ENB) trades for near $53.50 on the time of writing in comparison with $59.50 final June when most vitality shares hit their 12-month highs after the worth of West Texas Intermediate oil topped US$120 per barrel.

The pullback within the vitality sector that occurred by the tip of final 12 months and into the beginning of 2023 made sense for producers as oil slipped again to under US$70.

Nonetheless, the drop within the share costs of the vitality infrastructure shares seems overdone. Enbridge generates income by transporting oil, pure fuel, fuel liquids, and refined gasoline. So long as demand stays robust for the commodities, the market worth isn’t notably a priority for Enbridge.

Oil and pure fuel demand are anticipated to extend within the coming years as post-pandemic use rebounds. on the oil facet, commuters are heading again to the workplace in bigger numbers and for extra days whereas airways are scrambling to spice up capability to accommodate elevated journey bookings. Pure fuel has emerged as a key gasoline for producing energy to again up renewable vitality sources which have limitations.

Enbridge transports 30% of the oil produced in Canada and america and about 20% of the pure fuel utilized by Individuals. As well as, the corporate has an oil export terminal in Texas and is a component proprietor of a brand new liquified pure fuel (LNG) facility being constructed on the coast of British Columbia. Renewable vitality property and pure fuel distribution utilities spherical out the asset portfolio.

Enbridge expects adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) to be at the very least $15.9 billion in 2023, up from $15.5 billion final 12 months.

Enbridge raised the dividend by 3.2% for 2023, marking the twenty eighth consecutive annual dividend hike. On the time of writing, the inventory offers a 6.6% dividend yield.

CIBC

CIBC (TSX:CM) trades for near $58 per share on the time of writing. That is down from $73 in April final 12 months.

Traders bought financial institution shares over the previous 12 months amid rising fears that hovering rates of interest designed to tame inflation will set off a wave of mortgage defaults and a extreme recession. That state of affairs hasn’t materialized but and the Financial institution of Canada is predicting a mushy touchdown for the economic system.

Assuming the central financial institution is right, CIBC inventory seems to be low cost at this time. Nonetheless, traders ought to be prepared for extra volatility and potential additional draw back within the inventory if the Canadian economic system falls right into a deep recession and causes a wave of mortgage defaults. CIBC has a comparatively massive Canadian residential mortgage portfolio, so it could most likely take a bigger hit than its friends if the housing market tanks.

That being stated, excessive immigration ranges and a strong jobs market ought to put a ground beneath home costs, even when rates of interest stay excessive for longer than anticipated.

Traders who purchase CIBC inventory on the present stage can get a dividend yield of 5.85%.

The underside line on prime shares for passive earnings

Enbridge and CIBC pay enticing dividends that ought to proceed to develop. In case you have some money to place to work in a TFSA centered on passive earnings, these shares should be in your radar.