Stock Market Crash: 2 TSX Dividend Stocks

Is Pembina Pipeline Corporation (TSX:PPL)(NYSE:PBA) stock worth the risk while the price is still down from the March 2020 market crash?

| More on:
Various Canadian dollars in gray pants pocket

Image source: Getty Images

COVID-19 hit the oil and gas industry in the stock market hard this year. We don’t know when travel demand will pick up. Some analysts are saying to expect the COVID-19 pandemic to influence day-to-day lifestyles through mid-2021 to even 2022.

Oil and gas will be one sector of the economy that will struggle to survive during this period. That being said, is it a good idea to pick up oil and gas stocks on the stock market dip?

The answer is probably, “No.” Then again, Saudi Arabia’s sovereign wealth fund did recently invest in North American oil and gas industry through Suncor. Still, this decision doesn’t say a lot for other major energy players on the Toronto Stock Exchange.

Here are two energy stocks to consider (or reconsider) buying in the next few months.

TC Energy Corporation

TC Energy Corporation (TSX:TRP) specializes in energy infrastructure in North America. The energy stock hit a 52-week low of $47.05 during the March 2020 market crash. At the time of writing, the stock is trading for $59.51 per share. At this market value, the dividend yield is a decent 5.44%.

Income investors should like this stock as it also offers shareholders some value at the current price. The price-to-earnings (P/E) ratio is only 13.07. In today’s stock market, high P/E ratios are flashing warning signs among seasoned analysts. Federal Reserve decisions to keep bond interest rates low continue fuel more than inflation fears. Financial analysts are expressing concerns about an overvalued stock market.

Thus, TC Energy’s attractive P/E ratio and dividend yield are intriguing. Nevertheless, this purchase may not be worth the risk. North America doesn’t have a cost advantage in the oil and gas sector.

Pembina Pipeline Corporation

Pembina Pipeline Corporation (TSX:PPL)(NYSE:PBA) owns crude oil and natural gas pipelines produced in Western Canada. It also controls processing, infrastructure, and logistics assets. This energy stock hit a 52-week low of $15.27 after the March 2020 market crash. At the time of writing, the stock is trading for $29.55 per share. Offering a dividend yield of 8.53%, is this a good asset to buy for your retirement portfolio?

The stock would provide a generous income, but the price may still be a little high given the risk in the industry. The shares are selling for a price-to-earnings (P/E) ratio of 16.80. The oil and gas industry has to contend with unpredictable geopolitical forces and the COVID-19 pandemic is only causing more friction.

Earnings growth on this stock was decent prior to the health crisis. On the downside, the return on equity is relatively low at 6.84%. Further, the drop in demand from the COVID-19 pandemic casts substantial doubt on whether Pembina can keep up the pace of growth.

The point is that there could be less risky investments that make more practical sense on the Toronto Stock Exchange today.

Buy dividend stocks for income

When the stock market is low, look for some well-priced income stocks to buy for your retirement portfolio, Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP).

Find great values that will provide you with income. Ensure your investment decisions are made based on a long-term outlook. That’s one of the best strategies you can take to save for your retirement.

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 Debra Ray has no position in any of the stocks mentioned. The Motley Fool recommends PEMBINA PIPELINE CORPORATION.

More on Dividend Stocks

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »