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3 Oversold Dividend Stocks to Buy Now and Hold for Decades

Savvy investors know that market pullbacks can present great opportunities to buy top-quality stocks at prices that turn out to be very attractive over the long haul.

Let’s take a look at three Canadian dividend stocks that might be oversold after the recent market dip.

Enbridge (TSX:ENB)(NYSE:ENB)

Enbridge is working through a transition in 2018 that should sort out the majority of the concerns the market has had with the stock in the past two years.

The company is monetizing non-core assets to focus on its regulated businesses. This should make revenue and cash flow more reliable and predictable. Enbridge originally targeted asset sales of $3 billion for 2018, but demand has been robust for the businesses it wants to unload and deals worth $7.5 billion have already been announced. Enbridge is using the proceeds to pay down debt and fund more than $20 billion in ongoing development projects.

In addition, Enbridge is bringing its main subsidiaries under one roof to clean up the corporate structure.

Overall, management is making good progress and the market might not be appreciating the long-term cash flow potential. At the time of writing, Enbridge trades at $41.50 per share compared to $51.50 at this time last year. The dividend currently provides a yield of 6.5%, and investors should see steady dividend increases continue as new assets begin to generate revenue.

Toronto-Dominion Bank (TSX:TD)(NYSE:TD)

TD’s drop from $79 to $74 per share is hardly a major pullback, but this stock rarely goes on sale, and investors who have historically jumped in on a dip have fared very well.

TD is an earnings machine, generating about $1 billion in profit per month. The company is best known for its Canadian business, but the U.S. operations will likely drive a good chunk of the growth in the coming decades. TD has invested billions to build its American business that operates branches running from Maine right down the east coast to Florida. Rising interest rates and tax cuts south of the border combined with a strong U.S. economy bode well for TD in the coming years.

The company has a great track record of dividend growth, and that trend should continue. At the time of writing, the stock provides a yield of 3.6%.

Fortis (TSX:FTS)(NYSE:FTS)

Fortis operates natural gas distribution, power generation, and electric transmission businesses in Canada, the United States, and the Caribbean.

Major acquisitions in the United States in recent years have added geographic and sector balance to the portfolio, and Fortis continues to grow through organic investments, including the current $15.1 billion capital plan that should significantly boost the rate base over the next five years.

Fortis gets most of its revenue from regulated assets, so cash flow is reliable. The company has raised the dividend every year for more than four decades and is targeting annual increases of 6% over the medium term. The stock currently trades at $41 per share, down from the 12-month high of $48. Investors who buy today can pick up a yield of 4.1%.

The bottom line

Market corrections provide buy-and-hold investors with great opportunities to add top-quality stocks to their portfolios. At their current prices, Enbridge, TD, and Fortis deserve to be on your radar.

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Fool contributor Andrew Walker owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.

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