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3 Hard-Hit TSX Dividend Growth Stocks to Buy and Hold Forever

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You don’t have to look far to uncover the undervalued dividend growth stocks on the TSX. In this piece, we’ll have a closer look at three that have endured painful pullbacks in recent months, making them among the top “buy the dip” opportunities out there today.

Algonquin Power & Utilities

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) is a green power producer that can provide the perfect mix of growth and income.

Shares have taken a beating over this past year, now down around 16% from their all-time high. While there have been bumps in the road, I think young millennial investors looking to stash a name in their portfolio for decades at a time have a great entry point into the dividend-growth stud as shares look to bottom out.

Recently, Algonquin raised US$1 billion in capital via convertible equity units. Such a move should allow Algonquin to continue growing at a solid pace over the next several years. Undoubtedly, Algonquin is in great shape to keep the dividend hikes rolling in after a turbulent year.

The stock trades at 10.1 times earnings and 5.0 times sales, with a bountiful 4.5% yield and a rock-bottom 0.18 beta. Low correlation to the equity markets, a modest valuation, and a large, growing dividend, all included.

Suncor Energy

Suncor Energy (TSX:SU)(NYSE:SU) is on the retreat again. Despite not participating as much as some of the other integrated energy darlings in Alberta’s oil patch, shares have not been spared amid the latest pullback in oil prices. That has got to be frustrating for investors.

There are many reasons to stick around, though. The valuation is dirt-cheap, given the high-quality cash flows you’ll get from the name. For the calibre of business you’re getting, investors should expect to pay a hefty premium to the company’s book value. After a near-12% correction, though, shares of Suncor trade at a less than 20% premium to book.

The 3% dividend yield may seem modest, but I have it growing at a quicker rate than most other “big oil” plays out there. So, unless you think oil is going to fall below pre-pandemic levels of around US$50 per barrel, I find few reasons to stand on the sidelines, as Suncor stock goes on sale once again.

TD Bank

TD Bank (TSX:TD)(NYSE:TD) and the Big Six Canadian banks have been roaring out of their 2020 lows. But of late, they’ve been cooling off. TD’s peers have essentially flatlined, while TD stock itself pulled back mildly.

Today, TD stock is sitting down around 5% from its late May highs. While the dip is modest, I think it’s buyable for Canadian investors who aren’t ready or prepared for the growing possibility of higher interest rates.

In due time, the Bank of Canada (BoC) will start raising rates, which is not great news for most stocks. TD Bank is one of few firms that relish the moment that the BoC starts raising rates, as it can really improve its margins and start raking in more cash after years of dealing with rock-bottom rates.

It’s about time. And while the 5% dip is mild, I think it’s a buying opportunity for investors seeking dividend growth and value. The TSX dividend growth stock trades at 10.9 times earnings, with a 3.73% yield, making it one of the best banks for your buck today.

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 has no position in any of the stocks mentioned.

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