The markets have been soft this year, and while that has brought share prices down, it has had the reverse effect on yields. A lower stock price means that it costs investors less to secure the same dividend, thus yielding more per invested dollar.
Dropping share prices could make valuations more attractive, and investors could benefit not only from dividends, but a greater opportunity to profit from capital appreciation as well.
Below are three stocks that are undervalued, that pay dividends of more than 5%, and that could be great additions to your portfolio.
Altagas Ltd. (TSX:ALA) has had trouble finding any upward momentum in price, even despite a stronger price of oil. As commodity prices have reached highs not seen since 2014, the share price for Altagas has continued to plummet. In the past 12 months, the stock has declined by more than 20%, and year to date it is down more than 15%.
The decline in price has pushed the stock’s already high yield up to over 9%, and it could provide investors with a tremendous monthly payout. With the stock trading at only 1.3 times its book value, it also presents a good value buy for investors.
The share price has recently hit a new 52-week low, and it is overdue for a recovery, but pessimism in the oil and gas industry has prevented the stock from seeing much of an increase in price.
Altagas has strong fundamentals that make it a good buy, regardless of the recent stock performance. The company has posted a profit in each of the past five quarters, and sales were up 13% in its most recent quarter.
There’s a lot of upside for this stock, and it’s hard to imagine the price dropping much further.
Year to date, Emera’s share price has declined 13%, and its dividend yield has risen to more than 5.4%. Like Altagas, Emera is a good value buy, as it trades at just 1.5 times its book value and is only a couple of dollars away from its 52-week low.
The utility stock should provide investors with a lot of stability over the years to come and great dividends and capital appreciation along the way.
Just Energy Group Inc. (TSX:JE)(NYSE:JE) is another stock that is not too far removed from its 52-week low, as the share price has declined by more than 30% in the past 12 months. Its dividend yield has now reached 9%, and it could be a great time to lock in a low price for this energy stock.
Its price-to-earnings ratio is less than five, and although the company has had some fluctuations in its earnings, it has been able to stay in the black in three of the past five quarters.
The energy provider has a lot of stability in its top line, and that should enable it to continue to produce strong results in the years to come.