3 Dividend Stocks With up to 20% Growth Are Ready to Soar

Get growth from these attractive dividend stocks, including Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX), for next year and beyond.

The Motley Fool

A reasonably safe way to invest is to look for companies that are growing at a decent pace and are priced at a discounted valuation. The fact that the following companies pay safe dividends turns the safety up a notch.

I believe investors will do well with these dividend stocks in the next 12 months and beyond.

Intertape Polymer Group (TSX:ITP) operates in the specialty packaging industry. It develops, manufactures, and sells specialized tapes, films, and fabrics for industrial and retail use. It has about 63% of its sales from products, which has a top two market position in North America.

After a meaningful dip due partly to the rising costs of polypropylene, the stock saw some strength this week, which indicated it was too cheap to be ignored.

That said, it’s still a long way from its fair-value estimate. The analyst at Bank of Nova Scotia thinks Intertape will be able to grow its EBITDA by “10-20% per year for a few years,” while the stock trades at a discounted multiple of ~16.6.

Further, the analyst consensus from Thomson Reuters has a mean 12-month target of US$20.80 per share on the stock, which translates to nearly $25 per share (using a foreign exchange of US$1 to CAD$1.20).

At $19.50 per share, Intertape offers a 3.5% yield and has 28% upside potential, according to the consensus.

soar high in the sky

Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX) is a good growth story. It is a leading enterprise information management software and cloud services company with global operations. This year, it estimates it will generate ~41% of sales outside the Americas.

The tech company has had double-digit growth over the long term, as it has been making accretive acquisitions that have been good fits for the company. In the last three years, Open Text has increased its dividend per share by north of 15% per year.

Although Open Text only yields ~1.6%, it should be able to grow its dividend at a rate of 10-15%. The stock dipped after its lacklustre quarter. At ~$41, it now trades at a compelling multiple of ~15.3 and has ~23% upside potential in the next 12 months according to the Bank of Nova Scotia analyst.

Enbridge Inc. (TSX:ENB)(NYSE:ENB) stock has pulled back along with generally weak energy prices. However, Enbridge’s largely contracted, stable cash flow from its midstream and renewable power assets will continue to support a strong and growing dividend.

At $52 per share, Enbridge offers a yield of 4.7%. It has increased its dividend per share for 21 consecutive years and paid one for 64 years. Management aims to continue growing its dividend by 10-12% per year through 2024 based on a payout ratio of 50-60%.

The 12-month mean target of $62.90 per share from Reuters represents nearly 21% upside potential for the near term.

Investor takeaway

There are risks in any investment. Intertape will be affected by the cycles in the industrial and retail industries. Open Text could have integration problems with new acquisitions. Enbridge’s share price will be swayed by the volatility of energy prices.

That said, the three companies are a good, diversified group of dividend stocks with upside in the near term as well as growth potential for beyond.

Their risks have more or less played out, and their stock prices have dipped. Just recently, their shares have experienced some strength, which indicate the stocks may be turning around and ready to soar.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Kay Ng owns shares of Enbridge Inc, Intertape Polymer, and Open Text. The Motley Fool owns shares of Enbridge and Open Text. Enbridge and Open Text are recommendations of Stock Advisor Canada.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »