3 of the Best Canadian Dividend Stocks to Buy Under $20 Right Now

Canadian dividend stocks are on the rise, but here are three cheap stock picks that pay great dividends and trade under $20 now!

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

It has been a great year for Canadian dividend stocks. Rising inflation and demand for cyclical products play well for many Canadian businesses. Likewise, with interest rates at all-time lows, investors are fleeing from bonds to income-yielding equities. Consequently, dividend yields are compressing and stock valuations are rising.

Yet there are still some attractive opportunities to buy fairly priced Canadian dividend stocks today. Here are three stocks trading under $20 per share that look like really attractive income investments for the long run.

A top Canadian utility stock

Algonquin Power (TSX:AQN)(NYSE:AQN) trades around $19.50 per share today and pays an attractive 4.3% dividend. This ESG stock has underperformed this year, largely due to the entire renewable power sector pulling back in the spring.

Yet this is a really solid business to own for the long term. 70% of its business is from a high-quality group of diversified utilities. Its base cash flows are very predictable. Likewise, 30% of its earnings comes from renewable power assets that have an average contract life of 13 years.

The majority of its assets are located in the U.S., so this Canadian stock is positioned to benefit from the potential Biden infrastructure plan. However, Algonquin is also rolling out its own $9.4 billion capital plan over the next five years.

Algonquin expects to accrete a minimum of 8-10% annual earnings-per-share growth over that time frame. This was the 11th straight year Algonquin has raised its dividend by 10% or more. I expect more of the same if it can execute its strategic growth plan.

A top Canadian energy streaming stock

A Canadian stock with a more focused exposure on traditional energy is Topaz Energy (TSX:TPZ). Oil and natural gas prices are rising, so I think it doesn’t hurt for Canadian investors to have some exposure to this cyclical trend. Topaz is a nice way to get exposure, but without any direct commodity volatility risk.

It owns land royalty interests and natural gas infrastructure assets across Western Canada. This company literally just captures a stream of cash flows from owning assets, with hardly any operational costs.

Consequently, it garners a 90% free cash flow margin! The company has a low-levered balance sheet and ample dry powder to keep expanding its asset base. This Canadian stock trades around $16 per share, and it pays a 5.15% dividend. It recently raised that dividend by 5%, so that is always a positive sign for its business prospects.

A top real estate stock in the U.S.

WPT Industrial REIT (TSX:WIR.U) is a Canadian stock, but its industrial real estate assets are 100% in the United States. It owns 110 warehouse, logistics, and distribution properties in key logistic hubs in America. Since the pandemic, demand for industrial real estate has skyrocketed. E-commerce growth and general economic strength are leading to very strong rental rate growth in WPT’s core markets.

Its management team has a particular strength at developing spec development properties. Upon stabilization, these properties generally garner higher-than-market returns on investment. Fortunately, its strategy is supported by a number of high-quality joint-venture partnerships.

Over the past four quarters, this REIT has been accreting very strong funds from operations growth. Given the strong industrial market, this trend appears to be sustained for some time forward. Today, this Canadian stock trades for $18 per share and pays a 4% dividend. Yet it actually trades at a fair discount to other U.S. industrial peers. Given its value proposition, I believe WPT can provide investors strong total returns for years to come.

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 and WPT Industrial REIT. The Motley Fool recommends Topaz Energy Corp.

More on Dividend Stocks

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

Retirees: 2 On-Sale TSX Dividend Stocks to Buy Now for Passive Income

These top TSX dividend stocks now offer 6% yields.

Read more »

Payday ringed on a calendar
Dividend Stocks

New Investors: The 3 Best TSX Dividend Stocks for Monthly Cash

New investors looking for monthly dividend cash are in luck! Here are three attractive Canadian dividend stocks for growth and…

Read more »

A worker gives a business presentation.
Dividend Stocks

3 Dividend Stocks You Can Safely Hold for Decades

Here are three of the safest Canadian dividend stocks you can buy right now to hold for decades.

Read more »

Red siren flashing
Dividend Stocks

Buy Alert: This Energy Stock Is Unstoppable After Strong Results

Tourmaline Oil (TSX:TOU) beat earnings and looks unstoppable.

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

2 Safe Dividend Stocks to Beat Inflation

Canadian investors, young and old alike, can cope with or even beat inflation by owning two safe dividend stocks.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

2 Canadian Dividend Stocks (With +6% Yields) You’ll Regret Not Buying at These Prices

TSX dividend stocks such as TC Energy and TransAlta Renewable are well poised to deliver consistent returns to long-term investors.

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

2 TSX Stocks With Market-Beating Potential

Even in the current economic environment, long-term investors have a great chance of beating the market. Stocks like CN Rail…

Read more »

consider the options
Dividend Stocks

Is BCE or Enbridge a Better Buy for Passive Income?

BCE and Enbridge offer attractive dividend yields. Is one a better buy for TFSA passive income?

Read more »