Rebounds and pullbacks seem to be the trend of today. After the woes of COVID-19, the market started 2021 on a high note. Tech stocks continued to climb, and there was a rebound already underway for the TSX in general. However, there are still undervalued stocks that provide not just returns but dividends for 2021. Some of those dividends could soar in growth with a strong recovery after the pandemic. So, investors looking for stocks in their 2021 portfolio will want to have as much cash on hand to invest as they can, and fast.
Today, we’ll look at two stocks that not only will achieve strong revenue during a recovery but also offer dividends to boot. These dividends can be used to reinvest in each stock at no cost to you. Let’s get started.
Enbridge (TSX:ENB)(NYSE:ENB) is the perfect recovery play for those wanting in on the energy rebound. The company is a high-yield Dividend Aristocrat with a market capitalization currently around $92 billion. The company supports itself through long-term contracts running decades, which is why dividend investors will be happy to know their yield is safe.
But beyond these contracts, the company is seeking to grow its pipelines. In fact, in January, the company received approval to build its Michigan-based Great Lakes Tunnel Project. So, while the company may have had lower revenue last year from the pandemic, that leaves now as a stellar opportunity to long-term investors. In fact, even during this rough year, profitability still improved.
If analysts are correct, shares in this stock could jump back to all-time highs this year. That would mean a potential upside of 33% as of writing! On top of that, you’d lock in a 7.37% dividend yield at its current share price.
You don’t have to stick to energy stocks to see a rebound. The pullback in tech and green energy stocks leaves the door open for opportunity. By simply finding those stocks that provide a necessity in the market, you can enjoy strong growth this year and beyond.
Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) is the perfect play in this case. The company saw shares climb with the green energy boom at the beginning of the year, but shares have since fallen with the market. However, this leaves the perfect opportunity for green energy investors. Brookfield has 19,000 megawatts of renewable energy assets around the world. This continues to grow through acquisitions, and investors can look forward to even more of this in the future. That especially comes with government money likely coming the company’s way.
Long-term investors will see massive returns, but even in 2021, these shares are likely to rebound back to all-time highs. That would mean a potential upside of 25% as of writing, after climbing 661% in the last decade. Meanwhile, you’ll also lock in the 3.17% dividend yield from this stock.
After last year’s weakness, those seeking a strong rebound can look forward to those returns from the energy sector in general. Enbridge stock and Brookfield stock both offer different ways to take advantage of today’s market. The rebound in oil and gas coupled with the pullback in energy allows you to see massive returns while also collecting stellar dividends. That makes these two the perfect stocks to buy in 2021.
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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 Amy Legate-Wolfe owns shares of Brookfield Renewable Partners and ENBRIDGE INC. The Motley Fool owns shares of and recommends Enbridge.