Fool Canada’s first 1,000%+ winner?

Our Chief Investment Advisor, Iain Butler, and a team of The Motley Fool’s most talented investors from across the globe recently embarked on an unprecedented mission:

To identify the 20 Canadian small-cap companies they believe have the best shot at earning investors like you gains of 1,000%+ over the coming years.

For the next few days only, you can get the names and full details on these 20 potential “10-baggers” when you join Iain and his team in a first-of-its-kind project they have dubbed Discovery Canada 2017.

3 Bargain Dividend Stocks for Your RRSP

U.S. dividends received in non-registered or tax-free savings accounts will experience a 15% withholding tax.

So, the registered retirement savings plan (RRSP) is the best account to buy and hold discounted dividend stocks such as Wells Fargo & Co (NYSE:WFC), Amgen, Inc. (NASDAQ:AMGN), and American Hotel Income Properties REIT LP (TSX:HOT.UN).

Why is Wells Fargo a bargain today?

Wells Fargo is one of the largest banks in the U.S. The bank’s share price has declined more than 18% from its 52-week high of US$58 to below US$47 per share.

Before the financial crisis occurred, Wells Fargo had a tendency to trade roughly at a multiple of 15. Assuming it can trade at that multiple again, Wells Fargo is fairly valued at US$61 per share, implying the shares are discounted by 23%.

Assuming a more conservative multiple of 13.5, Wells Fargo’s fair value is US$55 per share, implying the quality shares are discounted by more than 14%.

No matter which multiple it could trade at in the future, today the bank has an S&P credit rating of A and offers a yield of 3.2% with a payout ratio of roughly 37%.

With a conservative payout ratio and a history of hiking its dividend every year since 2011, Wells Fargo should be able to continue raising its annual payout.

Why is Amgen a bargain today?

Amgen was founded in 1980 and today it is a leading biotechnology firm. From 2007 to 2015, Amgen increased its earnings per share at a compounded annual growth rate of 11.7%.

In 2011 Amgen started paying an annualized payout of US$1.12 per share. Since then that dividend has more than tripled to US$4 per share.

Amgen last hiked its dividend in the first quarter by 26.6%. Its payout ratio for this year is only expected to be about 36%. This means the company is still retaining roughly 64% of its earnings to grow the business.

At about US$152 per share, Amgen trades at a multiple of 14.2, which makes it a good buy.

Why is American Hotel a bargain today?

American Hotel owns a portfolio of 80 hotel properties and 7,096 guestrooms across 27 states in the U.S.

It has 45 hotels in 22 states, which primarily serve the freight-rail industry that is essential to the U.S. economy. For example, American Hotel has long-term relationships (26-30 years) with Union Pacific, BNSF, and CSX, so about 75% of its rail rooms are guaranteed, securing over 40% of its revenues.

Furthermore, it has 35 branded hotels with five franchise partners, including Hilton and Marriott.

American Hotel has been trading sideways, while its funds from operations per unit have been increasing since 2013. So, there’s a margin of safety for its shares today.

At $10.35 per unit, American Hotel yields almost 8.2%. In the first quarter, its payout ratio was 93.5%. It should be able to maintain its distribution.

Since American Hotel’s distribution can consist of U.S. dividends, interested investors should hold it in an RRSP to avoid any withholding taxes on the distribution.

Stock buy alert hits astounding 96% success rate!

The hand-picked investing team inside Stock Advisor Canada, recently issued a buy alert for one special type of "bread-and-butter" stock where The Motley Fool U.S. has banked profits on 23 out of 24 recommendations. Frankly, with an astounding 96% success rate that has delivered average returns of 260%, chances are this new pick could deliver life-changing returns as well. Because the team at Stock Advisor Canada fully embraces the same time-tested investing philosophies that have led to countless Motley Fool winners globally. So simply  click here to unlock the full details behind this new recommendation and join Stock Advisor Canada.

*96% accuracy includes restaurant stock recommendations from Motley Fool U.S. services Stock Advisor, Rule Breakers, Hidden Gems, Income Investor and Inside Value since each services inception. Returns as of 5/27/16.

Fool contributor Kay Ng owns shares of Wells Fargo and Amgen. The Motley Fool owns shares of Wells Fargo.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to find out how you can claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

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