As the stock market continues its ascent to new heights, some pundits have been ringing the alarm bell, calling for a correction in the range of 10-30%. Before you take a raincheck on the top Canadian dividend stocks that exist today, though, it’s important to remember that nobody can time the markets — not even the strategists at top banks can do this, although I’m sure they’d claim otherwise.
We’ve been hearing people calling for a correction for the entirety of this rally, ever since it climbed off those March 2020 lows. While we will be hit with a correction eventually, it’s probably unwise to time it and postpone your purchases, especially if you’ve got more than enough cash on the sidelines to take advantage of dips.
Don’t time the markets: Buy cheap dividend stocks, because they won’t stay cheap forever
Inflation is coming, and so too could be higher rates. Regardless, I think investors should swing at the pitches thrown into their strike zones, regardless of what the correction calls you’re likely to hear anytime the market hits a new all-time high.
The following Canadian dividend stocks, I believe, are on sale now and are ripe for picking for investors looking to invest for the long term, not time the markets over the near term.
Enbridge (TSX:ENB)(NYSE:ENB) is a 7.3%-yielding Canadian dividend stock that’s about as cheap as they come these days. The pipeline kingpin has endured more than its fair share of headwinds over the past year. With the pandemic’s end in sight, things may finally be looking up after years of falling under the weight of industry pressures.
The Canadian midstream energy firm has a well-supported dividend that’s likely to continue growing at an above-average rate over the next five years, as Enbridge’s project pipeline gradually pays dividends over time. The stock trades at 1.7 times book value, 2.4 times sales, which is well below that of the industry average.
Should oil prices surge above US$70 going into a rising-rate environment, Enbridge could be capable of big gains, as income investors flocked to rate-insensitive stocks.
Speaking of a rising-rate environment, TD Bank (TSX:TD)(NYSE:TD) could be on the cusp of a massive bull run. For years, the big banks have been putting up with thinning net interest margins and provisions for credit losses. In the post-COVID world, the tables will likely turn in a big way, and the big banks will finally have tailwinds to their back.
As one of the most prudent managers out there, TD Bank is a must-own dividend stock for the long term, regardless of the environment. Looking ahead, TD has its sights set on a major U.S. acquisition, which could bolster its American retail segment. Given TD’s managers are effective risk managers and deal makers, I suspect the next acquisition will unlock considerable shareholder value.
For now, TD stock boasts an impressive 3.8% yield, which ought to be more than enough incentive to hold the stock through the latter stages of this horrific pandemic. I think that investors have their sights set on the post-pandemic world, which, I think, appears tilted heavily in favour of TD and the big banks.
Speaking of contrarian and value investing, check out these terrific picks curated by the team here at the Motley Fool!
Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.
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 Joey Frenette owns shares of TORONTO-DOMINION BANK. The Motley Fool owns shares of and recommends Enbridge.