The market pullback is providing TFSA investors with a chance to buy some top TSX dividend stocks at undervalued prices for a portfolio focused on passive income.

Manulife

Manulife (TSX:MFC)(NYSE:MFC) trades for less than $22 per share at the time of writing and offers investors a 6% dividend yield. The stock was as high a $28 earlier this year, so there is ample upside opportunity, and you get paid well to ride out the market volatility.

Manulife reported Q1 2022 results that came in weaker than the same period last year. The dip in profits was largely caused by the surge of COVID-19 infections in the United States and Asia. The American insurance business faced higher morbidity and mortality claims in the quarter. The Asian operations saw a drop in sales as a result of widespread lockdowns.

These are temporary setbacks, and the worst of the COVID-19 impacts should now be in the rearview mirror.

Falling equity prices are currently putting pressure on the stock. Manulife has substantial wealth and asset management businesses. Rising interest rates, however, should provide a big boost to fixed-income earnings in the coming quarters and the market might not fully appreciate how big that bump might be for the firm. Manulife can now get much higher returns on the cash it has to set aside to cover potential claims.

Manulife should see long-term growth develop out of the Asia operations as middle-class wealth expands and demand rises for insurance and investment products.

BCE

BCE (TSX:BCE)(NYSE:BCE) trades near $63.50 per share at the time of writing compared to a 2022 high of $74. The pullback appears overdone considering there shouldn’t be a significant change in the broader outlook for the business.

BCE provides essential mobile and internet communications services that companies and households need regardless of the situation in economy. Even the entertainment subscriptions should hold up well in a downturn. People are more likely to reduce trips to restaurants, movie theatres, or expensive coffee shops before they axe their TV or streaming subscription.

That being said, BCE isn’t immune to an economic slowdown. Purchases of new mobile phones could drop, as people choose to keep older models to save money. Advertising fees in the media operations could also decline as businesses trim back their marketing budgets. At this point, these risks are likely already priced into the stock, as they represent a small part of the overall revenue stream.

Investors who buy BCE at the current price can pick up a 5.8% dividend yield and simply wait for the next distribution increase. BCE typically raises the divided by 5% per year, supported by solid free cash flow that is expected to grow 2-10% in 2022.

The bottom line on cheap stocks to buy now for passive income

Manulife and BCE are leaders in their respective industries and pay generous dividends that should continue to grow. If you have some cash to put to work in a TFSA focused on passive income, these stocks deserve to be on your radar.

The post Market Correction: 2 Cheap TSX Dividend Stocks for TFSA Investors appeared first on The Motley Fool Canada.

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The Motley Fool has no position in any of the stocks mentioned. Fool contributor Andrew Walker owns shares of BCE and Manulife.