Soaring interest rates soured investors on dividend stocks over the past two years. With rate cuts already underway in Canada and on the horizon in the U.S., many top TSX dividend-growth stocks now look oversold heading into 2025.

BCE

BCE (TSX:BCE) trades near $43.50 at the time of writing compared to $74 at the high point in 2022. The pullback has driven the dividend yield to 9%.

Any time a dividend yield gets this high there is a risk the market is signalling expectations for a cut to the distribution. No dividend is 100% safe, so investors need to be careful. That being said, the drop in BCE's share price appears overdone, and the distribution should be safe.

BCE's board raised the dividend by 3.1% for 2024. The increase was lower than the 5% average annual hike over the previous 15 years, but management seems to be comfortable with the financial outlook for the business, even as it faces headwinds from higher borrowing costs and weak revenue in the media group.

BCE cut roughly 6,000 positions over the past year to adjust to the current market conditions. The lower staff expenses will help the bottom line next year. The company also sold or closed dozens of radio stations and trimmed television programming to further reduce costs.

Economists expect the Bank of Canada to continue cutting interest rates in the coming months after the recent 0.25% reduction. BCE uses debt to fund part of its capital program, so lower interest rates should free up more cash for distributions.

The company expects 2024 revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be similar to 2023 or slightly better. This should provide support for the dividend heading into 2025.

TC Energy

TC Energy (TSX:TRP) also traded as high as $74 in 2022. The stock dipped as low as $44 last year before bargain hunters started to buy ahead of anticipated rate cuts in Canada and the United States in 2024 and 2025.

Pipeline companies have large capital programs with projects that can cost billions of dollars and take years to complete. TC Energy reached mechanical completion on its Coastal GasLink pipeline in late 2024 at an estimated cost of roughly $14.5 billion. That's more than double the original budget. Management monetized $5.3 billion in assets last year, and another $3 billion in assets sales is expected in 2024. This will reduce debt and shore up the balance sheet to pursue the rest of the capital program.

As new assets go into service and begin to generate revenue, the company should see cash flow rise enough to support ongoing dividend increases. TC Energy raised the payout in each of the past 24 years. Investors who buy the stock at the current price near $53 can get a dividend yield of 7.25%.

The bottom line on top stocks for passive income

BCE and TC Energy pay attractive dividends that should be safe. If you have some cash to put to work in a portfolio targeting high-yield passive income, these stocks look cheap today and deserve to be on your radar.

The post 2 Top TSX Dividend Stocks to Own for Passive Income appeared first on The Motley Fool Canada.