Income Seekers: 2 High-Yield Dividend Stocks to Buy Today!

These 2 high-yield dividend stocks could be attractive for contrarian investors amid volatile markets.

| More on:

Broader financial markets across the globe have been strong this week after monetary policy easing and stimulus announcements by various governments. The S&P/TSX Composite Index rallied approximately 20% this week from its recent lows. However, investors should not take this as a harbinger of long-term recovery, as uncertainties are far from over.

Markets will remain highly volatile in the short term as we continue to deal with pandemic and lockdowns. Thus, it would be prudent to stay invested in dividend stocks, which will have a relatively low impact of the pandemic and attain a faster recovery once these blues are over.

Solid yield and attractive valuation

Domtar (TSX:UFS)(NYSE:UFS) checks in all the boxes mentioned above. It offers a yield of 8% and will have a relatively low impact of the virus outbreak.

Investors can count on its dividends, as it has increased dividends consistently in the last 10 years. The stock has recently come down about 30% amid the overall weakness and is trading around its decade-low levels.

It’s a $2 billion US-based company that designs and manufactures a variety of pulp and paper and personal care products. The company reported earnings growth of 80% in 2018; however, that growth plunged 37% in 2019.

While the profit declined mainly due to seasonally lower demand, the management is confident of a comeback this year. Improving market conditions for pulp and improving sales of its personal care products will likely make things better for Domtar in 2020.

Additionally, Domtar has a solid balance sheet with a strong cash position and reasonable leverage. As market conditions improve, it can see firm progress on its bottom line and stock could eventually recover as well. Its solid yield and attractive valuation, particularly after the recent weakness are appealing.

Stay invested in dividend stocks

Shares of Methanex (TSX:MX)(NASDAQ:MEOH), world’s biggest methanol producer, have been in free-fall since last month. The weakness was evident because of its large exposure to China and the US. It also has operations in Europe, South Korea, South America, and Canada. However, its discounted valuation and a solid dividend yield indeed deserve a position in your watch list.

It offers a tasty yield of 9% at the moment. It has a long dividend payment history and has increased payouts by 9% compounded annually in the last five years. However, the stock has notably underperformed and has lost 75% in the last 12 months.

For 2020, the company is expected to pay dividends of $1.5 per share. The stock was trading close to $18 at the time of writing.

Methanex announced production cuts in some of its facilities last week amid the virus outbreak. However, the company clarified that these cuts are not expected to have a major impact on its cash flows.

While Methanex stock could remain volatile in the short term, it looks attractive based on its yield and valuation at the moment. As the demand in its core markets picks up again in the next few quarters, the stock could once again see gaining upward momentum.

Both the above stocks Methanex and Domtar offer solid yields at the moment. While dividend stocks are generally perceived as safe, these two could be relatively risky in the short to medium term and could be apt for contrarian investors.

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 Vineet Kulkarni has no position in any of the stocks mentioned.

More on Dividend Stocks

Two senior friends playing beat tennis on sand tennis court
Dividend Stocks

2 Safer, High-Yield Dividend Stocks for Canadian Retirees

Given their solid underlying businesses, consistent dividend payouts, and higher yields, these two dividend stocks are ideal for retirees.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution for Long-Term Gains

These stocks have increased their dividends annually for decades.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

Use Your TFSA, Earn $145.58 Each Month in Tax-Free Income

Are you looking to create some more income but don't have the time? Use your TFSA and make some every…

Read more »

dividend growth for passive income
Dividend Stocks

2 Passive-Income Stocks to Watch in January

Check out BMO Equal Weight REITs Index (TSX:ZRE) and another intriguing passive-income play this month.

Read more »

dividends grow over time
Dividend Stocks

1 Magnificent Canadian Dividend Stock Down 39% to Buy and Hold for Decades

This stock is a magnificent dividend stock that can withstand crises, generate wealth, and give inflation-adjusted annual payouts is down…

Read more »

clock time
Dividend Stocks

Time to Buy: 1 Dividend Stock Offering a Huge Deal

This dividend stock might be down, but don't keep that from missing out on this major deal.

Read more »

oil and gas pipeline
Dividend Stocks

Canadian Pipeline Stocks: TC Energy vs. Enbridge

Investors seeking to stabilize cash flows in this volatile market can invest in these dividend-paying Canadian pipeline stocks.

Read more »

Person holding a smartphone with a stock chart on screen
Dividend Stocks

Outlook for Rogers Communications Stock in 2025

Rogers stock has been going through a tough time, but what does the future hold for this telecom giant?

Read more »