Retirees: 3 TSX Value Stocks on Sale Right Now!

If you’re looking for a cheap stock, look no further than Royal Bank of Canada (TSX:RY)(NYSE:RY).

| More on:
edit Sale sign, value, discount

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

If you’re retired, you might bemoan the lack of high-yield value investments available today. A rising stock market has pushed dividend yields lower and P/E ratios higher. Faced with this situation, you might feel resigned to lower yield going forward. But before you give up hope for value and yield, it helps to look at the landscape. While the broad market indexes are fairly expensive and low yield, there are many individual investments that offer value and dividends aplenty. In this article, I will explore three such investments you can buy on the TSX today.

Northwest Healthcare Properties REIT

Northwest Healthcare Properties REIT (TSX:NWH.UN) is a Canadian REIT that rents out healthcare office space. At today’s prices, it yields about 6%. That means you get $6,000 in annual cash back on a $100,000 position — assuming no dividend hikes.

Northwest Healthcare has operations in both Canada and the European Union. In both of these regions, healthcare is largely government funded, giving Northwest’s tenants unparalleled ability to pay. That fact is borne out in the company’s recent results. In 2020, NWH.UN collected a 97% share of typical rent. In the same year when COVID-19 was devastating residential and retail REITs, Northwest thrived. Still, the stock is cheap enough that you can get a solid 6% yield on it — not a bad dividend play for 2021.

Royal Bank of Canada

Royal Bank of Canada (TSX:RY)(NYSE:RY) is a Canadian bank stock that yields 3.66%. That’s not quite the monster yield you’ll get with NWH.UN, but it has a lot of growth potential. In the first quarter, Royal Bank’s earnings increased by 10% year over year. That easily surpassed analyst estimates and provided fuel for dividend increases going forward. Over the last five years, RY has increased its dividend by 6.34% annualized. Despite that, it still has a fairly low payout ratio. So, if you buy it today at a 3.7% yield, you could see a much higher yield on cost in the future.

BCE

Last but not least, we have BCE (TSX:BCE)(NYSE:BCE). BCE is a mega-high yield telco stock that pays out 6%. Before going any further, I should clarify that this stock’s high yield is partially due to poor capital gains. The stock is down slightly over five years, and such negative price movements increase the yield. But it can also indicate a business that’s not in such a great place.

Nevertheless, BCE’s yield today is high. It is also backed by some dividend growth. Over the last five years, BCE’s dividend has grown by about 5% annualized. If that continues, then your yield on cost tomorrow will be higher than your yield today. Of course, BCE stock is down for a reason. Its most recent quarter saw negative year-over-year growth rates in revenue, net income, and free cash flow. It should also be noted that BCE has substantial investments in media, and advertising revenue has been lower in the COVID-19 era than it was before. Continued dividend growth is far from guaranteed, but the yield today is already very high, and the stock may see gains in the post-pandemic world.

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 Andrew Button owns shares of ROYAL BANK OF CANADA. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.

More on Dividend Stocks

energy oil gas
Dividend Stocks

2 High-Yield Energy Stocks to Buy as Recession Approaches

Energy stocks such as TC Energy and Canadian Natural Resources allow investors to generate income even in recessionary times.

Read more »

green power renewable energy
Dividend Stocks

3 Top Dividend Stocks to Drive Your Passive Income

These three high-yielding, safe dividend stocks could boost your passive income.

Read more »

protect, safe, trust
Dividend Stocks

TFSA Wealth: How to Earn $363 in Monthly Passive Income for Life

Canadian investors can harness the power of the TFSA to generate steady tax-free passive income for decades.

Read more »

Canadian Dollars
Dividend Stocks

TFSA Millionaire: How to Turn $40,000 Into $1.2 Million for Retirement

Here's how TFSA investors are using the power of compounding to buy top Canadian dividend stocks to build retirement wealth.

Read more »

edit Balloon shaped as a heart
Dividend Stocks

My 3 Favourite TSX Stocks Right Now

These three TSX stocks are my favourite performers. All have strong dividends, future growth, and historic performance behind them.

Read more »

Dividend Stocks

Passive Income Generator: 1 Dividend Stock Yielding 6.16%

A high-yield energy stock that pays monthly dividends is a reliable passive income generator for investors.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

3 Cheap Canadian Dividend Stocks to Buy Now for Passive Income

Investors seeking quality passive income can now buy top TSX dividend stocks at cheap prices.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

While these high-quality dividend stocks are oversold, they are some of the best stocks to buy for passive-income seekers.

Read more »