The ideal time to make money off this market crash was in March when the market truly hit rock bottom. And while it’s likely that we may see another crash in the future, we can’t be sure why or when it will roll around again. So, if you have some cash to invest, it might be better if you look into stocks that are still trading below fair value.
The reason is that if the market continues its recovery, you might not get another chance to buy the dip in the near future.
A diversified REIT
Choice Properties REIT (TSX:CHP.UN), with a market cap of $3.75 billion, is one of the 10 largest (by market cap) REITs currently trading on TSX. It has an impressive portfolio of 724 individual properties, covering an area of 65.6 million sq. ft. The bulk of the properties that come under Choice’s portfolio are retail, followed by industrial, with a few office properties and a bit of undeveloped land.
Despite so much exposure to retail, which isn’t a very desirable asset class right now, Choice properties stock is only trading 20% below its high yearly value. While still a decent enough discount, it’s relatively better than the sector as a whole. The company was considered a Dividend Aristocrat once, but it stopped increasing its payouts in 2017.
Currently, the company is trading at a low price of $12.1 per share, and with its juicy 5.87% yield, it can turn your $5,000 into a $293 payout a year.
A mortgage company
The Canadian housing market isn’t looking so good right now. And it might not seem like an amazing time to invest in a mortgage lender, but you might want to make an exception for First National Financial (TSX:FN). The company is the largest non-bank mortgage originator and underwriter in the country. It focuses on technology-driven solutions to provide efficient service to borrowers.
In the past five years, the company’s market value had grown steadily by over 71%. During the crash, the stock fell by almost 50% at its worst point, but it recovered quickly. Still, it’s 23% down from its start-of-the-year value and trading at a discounted price of $29.2 per share. It’s also a decent growth stock with a current yield of 6.29%. With a $5,000 invested in First National, you can expect a monthly payout of $26.
The company offers loans to both commercial and residential real estate borrowers, so it’s not exclusively exposed to the housing market. If things go back to normal, this stock can offer a decent combination of dividend income and capital growth.
A Big Five bank
Toronto-Dominion, the second-largest bank in the country, is still trading at a 21% discount right now for $57.5 per share. It’s one of the best growing banks in the country and a Dividend Aristocrat. It increased its payouts by 54% in the past five years. Thanks to low valuation, the bank is currently offering a juicy yield of 5.4%. The payout ratio is stable at 45%.
Even at the low price right now, TD’s five-year CAGR (adjusted for dividends) comes out to 4.45%.It’s modest, but it might be digestible enough for an amazing dividend stock. TD also has strong exposure to the U.S. market, which is a double-edged sword at the moment, but it also means that it is diversified enough to absorb local losses better than some of its peers.
A mere $5,000 wouldn’t have enhanced your portfolio’s dividend profile a few months back. But now, when so many amazing dividend stocks are trading at low prices and offering higher yields, you can make strong additions to your dividend side of the portfolio with just a tiny amount of capital.
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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 Adam Othman has no position in any of the stocks mentioned.