Breaking News
0

Buy These 3 Dividend Stocks Before the Market Turns Around

Stock MarketsJan 12, 2019 10:16
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The final three months of 2018 witnessed one of the longest corrections in years. Although we’re seeing some early signs that the market is beginning to turn around, prices are still way down from their summer highs. Last year, the S&P/TSX Composite Index peaked at 16,561 points. As of this writing, the index was in the mid-14,000s, so it’s still down about 11% from the top.

But buying opportunities like this don’t last forever. If you want to buy great stocks on the dip, you have to act. And right now there are tonnes of Canadian dividend stocks trading at discounted prices, just begging for a place in your TFSA. One of the best is a bank stock that has taken a beating in the markets, despite steady growth and strong fundamentals.

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) Bank of Nova Scotia is the cheapest of Canada’s Big Five banks. Its stock has been tanking since before the current correction began; over a five-year period, it has returned a mere 5.69%. As a result of this, the P/E ratio has fallen to a dirt-cheap 10. However, the company’s earnings have grown at about 6% CAGR over five years, so the five-year return equals just one year of earnings growth. That combined with an impeccable balance sheet and an A+ credit rating from Standard & Poor’s mean this stock is likely undervalued. The current price also enables you to lock in a solid 4.9% dividend yield, plus a likelihood of long-term dividend growth.

Canadian National Railway (TSX:CNR)(NYSE:CNI) CN is one of Canada’s best-performing long-term stocks. According to Fool contributor Andrew Walker, a $10,000 investment in CN 20 years ago with dividends reinvested would be worth $200,000 today. And if you find that hard to believe, remember this company’s stock has increased more than tenfold in price since 1999, while paying a dividend that has grown at 15% a year. Naysayers would argue that the company can’t possibly keep this up in the future, but it’s still growing earnings at 15-20% in most quarters. It’s a rock-solid buy that now trades at just 11 times earnings.

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) Last but not least, we have TD. Like CN, TD is a dividend grower, with the payout increasing 11% on average every year. This more than makes up for its “so-so” current yield of 3.95%. But, even more importantly, TD is a growing enterprise, with earnings growth averaging about 9-10% a year. Its U.S. Retail business grew at a massive 44% year over year in its most recent quarter; if that growth continues, it could eventually send bottom-line earnings growth higher as well.

TD also benefits from conservative lending rules that keep it from taking on too many risky loans, so it’s not as vulnerable to crises as large American banks like Bank of America (NYSE:BAC).

The current downturn has resulted in TD trading at just 11 times earnings, so now is a great time to pick up this boatload of value for a bargain price.

Fool contributor Andrew Button has no position in any of the stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.

This Article Was First Published on The Motley Fool

Buy These 3 Dividend Stocks Before the Market Turns Around
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email