Earlier this month, I’d discussed three dividend stocks that looked like bargains. A rout in the energy sector has put many top TSX stocks at or near 52-week lows in the month of July. There are many potential discounts in that sector, but today I want to focus on two dividend stocks outside it. One looks like a bargain, while the other looks like a must-buy after a solid quarterly report.
NFI Group (TSX:NFI) is North America’s largest bus manufacturer. It was my top stock pick back in April 2019. Shares of NFI Group have dropped 11.3% in 2019 as of close on July 30. The stock has slumped since it released a less-than-stellar first-quarter 2019 earnings report on May 8.
The company is set to release its second-quarter 2019 results on August 6. However, it did release an orders and backlog snapshot for the quarter. Investors may want to brace for a disappointing Q2 2019, as NFI Group warned that supply delays, missed production days, and postponed customer inspections all contributed to a slump in overall deliveries. It expects higher deliveries in the second half of 2019.
NFI Group stock has a price-to-earnings ratio of 8.8 as of close on July 30. This is a favourable spot relative to industry competitors. Shares had an RSI of 23 at the time of this writing, putting NFI Group well into technically oversold territory. The company last announced a quarterly dividend of $0.425 per share, which represents an attractive 5.8% yield. Value and income investors should consider adding NFI Group at its discounted price point right now.
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Canadian Utilities (TSX:CU) is a member of the ATCO group of companies. It operates in the electric utility space. This past week, I’d discussed the reasons I’m still bullish on utility stocks in the second half of 2019. Barring a huge shock, it looks like the United States Federal Reserve will move forward on a rate cut on Wednesday. The Bank of Canada is determined to stand pat in 2019, but analysts expected a rate cut by the first half of 2020.
A softer rate environment is good news for utilities, which have thrived as bond yields have collapsed. Canadian Utilities is an elite option for its stability and decades-long run of dividend growth. In the second quarter, the company reported adjusted earnings of $126 million, or $0.46 per share, compared to $107 million, or $0.39 per share, in the prior year. The positive earnings report jolted Canadian Utilities stock out of technically oversold territory, but I still like the stock at its current price. It boasts a P/E below 20 as of close on July 30.
Canadian Utilities recently announced a quarterly dividend of $0.4227 per share. This represents a solid 4.7% yield. Best of all, the company has achieved a remarkable 47 consecutive years of dividend growth.
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 Ambrose O'Callaghan has no position in any of the stocks mentioned. NFI Group is a recommendation of Stock Advisor Canada.