One of the toughest tasks we face as investors is finding the right stock at the right price when we’re ready to make a purchase. Fortunately for those of you who are reading this article, I’ve done the hard part and compiled a list of three undervalued stocks with high and safe yields of 3-5%, so let’s take a quick look at each to determine if you should buy one of them today.
1. Fortis Inc.
Fortis Inc. (TSX:FTS) is one of the largest electric and gas utilities companies in North America with operations across Canada, the United States, and the Caribbean. It’s also in the process of acquiring ITC Holdings Corp., and once this deal is completed, it will become the largest independent electric transmission company in the United States and one of the 15 largest public utilities in North America as measured by enterprise value.
Its stock currently trades at just 19.1 times fiscal 2016’s estimated earnings per share of $2.15 and only 16.7 times fiscal 2017’s estimated earnings per share of $2.46, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 20.1 and its industry average multiple of 43.3.
In addition, Fortis pays a quarterly dividend of $0.375 per share, or $1.50 per share annually, which gives its stock a yield of about 3.65%.
Investors should also make the following two notes about its dividend.
First, Fortis’s 10.3% dividend hike in September 2015 has it on pace for 2016 to mark the 44th consecutive year in which it has raised its annual dividend payment.
Second, it has a dividend-per-common-share growth target of 6% annually through 2020, making it one of the best dividend-growth stocks in the market.
2. Cineplex Inc.
Cineplex Inc. (TSX:CGX) is Canada’s largest owner and operator of movie theatres with 163 theatres across the country and an estimated 79.5% box office market share.
Its stock currently trades at just 26 times fiscal 2016’s estimated earnings per share of $1.98 and only 22.6 times fiscal 2017’s estimated earnings per share of $2.28, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 29.7 and its industry average multiple of 32.9.
In addition, Cineplex pays a monthly dividend of $0.135 per share, or $1.62 per share annually, which gives its stock a yield of about 3.15%. Investors must also note that the company’s two dividend hikes since the start of 2015, including its 3.8% hike last month, have it on pace for 2016 to mark the sixth consecutive year in which it has raised its annual dividend payment.
3. Fiera Capital Corp.
Fiera Capital Corp. (TSX:FSZ) is Canada’s sixth-largest asset manager with approximately $98 billion in assets under management.
Its stock currently trades at just 24.2 times fiscal 2016’s estimated earnings per share of $0.56 and only 18 times fiscal 2017’s estimated earnings per share of $0.75, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 36.9 and its industry average multiple of 58.3.
In addition, Fiera pays a quarterly dividend of $0.15 per share, or $0.60 per share annually, which gives its stock a yield of about 4.4%. Investors must also note that the company’s three dividend hikes since the start of 2015, including its 7.1% hike in March, have it on pace for 2016 to mark the sixth consecutive year in which it has raised its annual dividend payment.
