The New Year has arrived, and TFSA investors now have an extra $6,000 of contribution room that they can spend. If you’re looking for some stocks in which to invest that money, look no further than the following two dividend stocks:
Corus Entertainment Inc (TSX:CJR.B) is a stock that has been undervalued for some time, and it’s one of the best buys in a market that’s heavily overvalued.
Trading well below its book value at a multiple of around 0.7 and a price-to-earnings multiple of less than eight, Corus is a dirt-cheap stock that can produce some excellent results for investors in 2020.
A big problem for Corus over the past few years has been a lack of growth, as sales have remained within a range of $1.64 billion to $1.69 billion in each of the past three fiscal years.
But with the company joining forces with Amazon to provide cord-cutters with STACKTV, an option for Canadians to watch some of their favourite channels, including HGTV and Food network, it could unlock a new growth opportunity for the company.
At minimum, Corus could be a solid dividend stock for investors to hold. Although it did cut its dividend payments in 2018, the good news is that its payout ratio of 24% today is much more sustainable, and investors still earn a solid dividend yield of 4.5% per year.
With an opportunity to earn a fairly high dividend while positioning themselves for some capital gains, Corus could help produce some strong returns for investors in 2020.
AltaGas Ltd (TSX:ALA) was my top stock pick for 2019, and it’s done remarkably well this past year, giving investors total returns of more than 50%. As well as the stock has performed, there’s still lots of potential for it to continue to rise in value.
It’s still slightly below book value, trading at a price-to-book multiple of around 0.9. Its PEG ratio, which factors in future earnings growth, is around one, which indicates that the stock is very well priced. Today, the stock’s price-to-earnings ratio of five is also very cheap.
The company’s utility business makes it a relatively stable stock in which to invest. With its focus on the U.S. market, investors can benefit from a very strong economy south of the border.
The company recently released its guidance for 2020, where it expects to see a lot of growth in the coming year.
CEO Randy Crawford stated in the press release, “The strong earnings growth in 2020 reflects our ability to capitalize on the significant opportunities within our core businesses.
We expect strong utilities segment EBITDA growth of over 10 percent in 2020, underpinned by approximately 10 percent rate base growth and higher achieved returns. In our midstream segment we expect 20-25 percent growth in 2020, adjusting for asset sales.”
Similar to Corus, AltaGas also cut its dividend, but it too is stronger because of it. Yielding 4.8% in dividend income annually, the stock can be another great source of dividend income for TFSA investors.
That could go very well with the potential capital appreciation that investors can earn from holding shares of AltaGas in 2020.
