The Motley Fool

3 Top Dividend Stocks to Buy in August 2020

Here are three top dividend stocks that you can consider buying in August. They are a diversified group that’s set to deliver a good mix of growth and nice dividend income.

Toronto-Dominion Bank stock

August is a perfect time to buy some Toronto Dominion Bank (TSX:TD)(NYSE:TD) stock. The quality dividend stock has sold off due to the grim outlook of the North American economy.

The TD stock price appears to have stabilized at about $59 per share. That’s a cheap valuation of about 8.9 times normalized earnings. Therefore, it’s an excellent long-term entry point if you believe the economy will eventually recover.

What’s neat is that investors don’t necessarily need the TD stock price to go up to generate a good return. The top North American bank provides a safe 5.3% dividend yield. Even with a challenging 2020, its payout ratio is estimated to be roughly 63% this year. The high yield compared to history indicates it’s a good time to invest in TD stock.

TD Dividend Yield Chart

TD Dividend data by YCharts

If you’re concerned about the COVID-19 disruptions to the economy, you can wait for the bank to report its fiscal Q3 results on August 27 before deciding whether or not to invest.

Canadian Apartment Properties REIT

Canadian Apartment Properties REIT (TSX:CAR.UN) or CAPREIT has commanded a premium valuation since 2016. It seems that as the investing community saw how high quality its earnings are, the stock was bid up higher and higher.

Finally, the selloff in the premium stock this year allows interested investors to buy on the dip.

CAPREIT is as solid as ever. Its portfolio is in key growth markets like Toronto, Vancouver, and Montreal. Additionally, it has exposure to Europe for higher growth via ownership stakes in two European REITs, from which it earns recurring revenues for its property and asset management services.

Since 2007, the residential REIT has experienced only one year of earnings per share decline. It’s especially important to highlight that it increased its earnings even in 2008-2010, which was around the last recession.

Today, CAPREIT offers a decent yield of close to 2.9% and 12-month upside potential of about 19%, according to analysts.

Brookfield Business Partners

Investors should be ready for a volatile ride with Brookfield Business Partners (TSX:BBU.UN)(NYSE:BBU) stock, which has been absolutely battered this year. The growth stock is down 40% despite recovering substantially from the March market crash low.

Management expects 2020 to be challenging for BBU. It can’t be helped that the business is sensitive to economic booms and busts. That said, investors can be rewarded with substantial price appreciation when the economy expands again.

Even now, analysts have a 12-month price target of US$38 on the stock, which represents 42% near-term upside. Nonetheless, it’d be safer to have an investment horizon of at least three years.

BBU has the liquidity to weather and take advantage of this economic downturn to come out stronger in the end.

Since it aims for returns of 15-20%, investors buying it at a discount in August can expect solid returns of closer to 20% per year. You just need to be patient and hold until it’s a good time to sell. It also offers a bonus yield of just under 1%. If you time your buys and sells right, this is the kind of stock that’ll help you retire early!

Notably, the stock can be especially volatile, as the company will be reporting its Q2 results on Thursday.

Here are more great stock ideas to consider in August.

The 10 Best Stocks to Buy This Month

Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.

Click Here to Learn More Today!

Fool contributor Kay Ng owns shares of Brookfield Business Partners L.P. Limited Partnership Units, CDN APARTMENT UN, and The Toronto-Dominion Bank.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.