TFSA Investors: 3 Dividend Stocks on Sale

Canadian Utilities Limited (TSX:CU) and these two other dividend stocks could produce some great returns for your portfolio.

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If you’re looking for an easy way to accumulate cash for your portfolio, dividend stocks are a great way to do that. And inside of a TFSA, any eligible investments can earn cash for you on a tax-free basis, making the savings vehicle a very important tool as you look to save and build wealth.

If you keep an eye on dividend stocks that have dropped in price or that have gone “on sale,” you have the opportunity to lock in a higher yield than what would normally be available since the yield is inversely related with the stock price. The assumption, of course, is that the stock will go back up in value and that the decline is not likely to be a permanent one.

Below are three stocks that have declined by more than 10% this year and that could be great options to add to your TFSA today.

Canadian Utilities (TSX: CU) has dropped more than 15% so far this year, although in the past three months the bleeding has stopped, with the stock up a little over 1% during that time. However, it doesn’t help that the company is coming off a disappointing quarter, where it posted a net loss while seeing its sales increase by 3%.

Over the previous four quarters, Canadian Utilities has averaged a profit margin of 9.8%, and if it can get back to that same consistency, there’s a good chance that the stock will recover, as it currently hovers near its 52-week low.

The stock currently pays a dividend of 5% per year and it has grown over the years, making it a very appealing buy for investors looking to hold the stock for the long term.

Maple Leaf Foods (TSX: MFI) is down 13% year to date. It too has been impacted by disappointing results, as supply issues caused problems for the company in Q1, where it failed to meet analyst expectations. The packaged-meats company is a staple in Canadian grocery stores, and its long-term health remains strong as it has posted a profit in each of the past five quarters.

Currently, Maple Leaf Foods trades at around twice its book value and could provide investors with a lot of value for their money. While the stock doesn’t have a terribly high yield, it has increased to over 1.6% and can provide you with a modest dividend to add to the stock’s long-term gains. In five years, Maple Leaf Foods stock has increased by over 120%.

WestJet Airlines (TSX:WJA) has crashed the most of the stocks listed here, losing more than 25% of its value since the start of the year. WestJet has been on a persistent decline for much of the year after a strong 2017 saw the stock reach as high as $28.

But with oil prices starting to rise and chipping away at the company’s profits, along with increasing competition, WestJet has struggled, and this past quarter it recorded a loss of $21 million, which scared away many investors. However, for those willing to wait out a recovery, WestJet currently pays a dividend of around 2.9% per year.

Fool contributor David Jagielski has no position in any of the stocks mentioned.

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