4 TSX Dividend Stocks to Buy Under $20 This May

Looking for dividend yields and growth ahead? These four TSX dividend stocks have great prospects now and out of the pandemic!

| More on:
Various Canadian dollars in gray pants pocket

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

As interest rates have remained historically low, the yield for TSX dividend stocks have compressed. Income investors just cannot get real returns out of bonds. Risk-on assets, like dividend stocks, are one of the only alternatives investors can utilize for yield. As a result, dividend stocks have gained value, but their yields have compressed. If you are looking for a mix of income and capital returns, these four top undervalued TSX stocks might do the trick.

A TSX utility stock with strong growth ahead

Algonquin Power (TSX:AQN)(NYSE:AQN) is the largest of these TSX dividend stocks with a market capitalization of $11 billion. Today, it trades just above $19 per share and yields a 3.92% dividend. I like this stock for its combination of strong renewable tailwinds, stable income, and its visible growth pipeline.

Recently, Algonquin was priced down due to some negative effects from the extreme Texas winter event in February. Yet, this stock has a very diversified utility and renewable power businesses. The company operates largely in the U.S., so it should benefit from the Biden infrastructure investment plan. Similarly, it has an aggressive $9.2 billion growth pipeline in motion. Investors can expect at least 9% annual earnings per share growth over the next five years.

An undervalued renewable stock

Another smaller less-known renewable power producer I like here is Polaris Infrastructure (TSX:PIF). The stock trades just below $20 and it also pays a 3.8% dividend. This TSX stock is under-the-radar, largely because it operates 100% in South America. It operates a very high-quality geothermal plant in Nicaragua, as well as a number of hydro assets in Peru.

Compared to renewable peers, this stock is cheap with a price-t0-earnings ratio of 10 times. Yet, the company is very well managed, it has solid long-term contracts, and a very good balance sheet. The company can grow organically with its current geothermal project, but it should also benefit by acquisition opportunities in northern South America.

A value TSX tech stock

A TSX technology stock that pays an attractive dividend today is Sylogist (TSX:SYZ). Right now, it trades for $16 per share and pays a near 3% dividend. While this stock has lagged other tech peers, it has a number of catalysts going forward. First, it has a new management team that is eager to be more transparent and aggressively pursue growth. Secondly, the company is naturally a free cash flow machine.

It provides SaaS solutions for non-for-profit and public organizations. Its revenues are largely recurring and its services are very sticky. As a result, it has a net cash positive balance sheet and ample liquidity to pursue consolidation in this niche software space.

A Canadian wine and spirits leader

An intriguing play on the pandemic recovery, is Andrew Peller (TSX:ADW-A). This TSX stock trades for just $11 per share and pays a 2% dividend. It is one of Canada’s largest producers of wines and spirits. It has a diversified set of offerings that have performed with resilience through the pandemic. Over the past three quarters, it has grown sales and EBITA by 4.6% and 18%, respectively.

The stock is fairly cheap with only a 13 times earnings multiple. Similarly, it just announced it is going to commence buying back stock this year. Combine those factors with pent-up demand for restaurant dining and premium products and this TSX stock should see a nice recovery alongside the economy.

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 Robin Brown owns shares of Algonquin Power & Utilities. and Polaris Infrastructure Inc. The Motley Fool owns shares of and recommends Polaris Infrastructure Inc.

More on Dividend Stocks

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

Payday ringed on a calendar
Dividend Stocks

Canadian Dividend Investors: 2 ETFs That Pay Monthly Income With High Yields

Dividend ETFs often pay out monthly distributions compared to dividend stocks.

Read more »

think thought consider
Dividend Stocks

2 Stocks I Own and Will Buy More of if They Fall

Stocks tend to go up in the long run. Therefore, buying a basket of diversified stocks on dips should lead…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

Blue-chip dividend stocks such as Royal Bank of Canada and Manulife Financial pay investors a tasty forward yield.

Read more »

TFSA and coins
Dividend Stocks

TFSA Passive Income: 3 Solid Stocks to Earn $355 Every Month

Looking to earn steady passive income? Here are three solid TSX stocks that can help you earn a worry-free passive…

Read more »

Technology
Dividend Stocks

RRSP Investors: 2 Stocks to Buy in August for Dividends and Capital Gains

RRSP investors can still find top TSX dividend stocks trading at cheap prices today for a buy-and-hold portfolio.

Read more »