3 Top Canadian Dividend Stocks to Buy While They’re Still Cheap

Looking for cheap Canadian dividend stocks to help supplement your income? Here are three high-quality stocks you can buy at a bargain today!

| More on:
money cash dividends

Image source: Getty Images

The Canadian stock markets could be due for a shake-up as we head into the fall. There are a lot of factors (health, politics, geopolitics, economics) that could shake up markets. That is why it is not a bad idea to get defensive in some high-quality Canadian dividend stocks. Here are three stocks that are attractive and cheap.

A top Canadian dividend-growth stock

Algonquin Power (TSX:AQN)(NYSE:AQN) is a great stock for defence and offence with a unique portfolio of regulated utilities and renewable power assets. That combination provides stable, predictable cash flows if the market turns down, and upside from long secular tailwinds driving renewable power growth.

Algonquin has been investing heavily to expand its operational capacity and increase its rate base. It has a $9.4 billion capital plan in the works. Through this, it expects to generate 8-10% annual earnings per share growth over the next four to five years. It has already deployed $3.1 billion of that capital.

These returns do not include any mergers or acquisitions (although, there have been rumours about a potentially large one) or its greenfield renewable power development pipeline. In addition, it pays a great 4.3% dividend that it has consistently grown for years. This Canadian stock is down over 5% this year and looks attractive for a long-term position.

A top real estate play on Europe

Real estate is a really attractive asset class right now. With interest rates low and higher-than-average inflation, real estate businesses are able to earn very high, growing cash flow spreads. One Canadian stock that is not that well-known is European Residential REIT (TSX:ERE.UN). Frankly, there is nothing truly Canadian about this stock.

It owns over 6,000 multi-family rental units in the Netherlands and a few commercial office properties sprinkled across Western Europe. The Netherlands is a great place to own apartments. The country has a very dense population, strong immigration trends, and a very limited new housing supply.

This REIT has high 98% occupancy and is seeing mid-teens rent growth on new leases. Its debt is around 1.6%, so it captures market-leading debt-adjusted cash flow yields. Despite this, this Canadian stock is one of the only residential REITs that’s trading below its net asset value. It pays a 3.5% dividend and it looks like great value today.

A top Canadian bank stock

For dividends, Canadian banks stocks are well-known around the world. While I wouldn’t call Toronto-Dominion Bank (TSX:TD)(NYSE:TD) a cheap stock, it is down 2% since it released earnings on Thursday. The company beat earnings expectations, earning $1.92 per share in the quarter.

However, the stock saw is seeing some weakness. Quarter-over-quarter revenues were down less than 1%. Some of that was due to loan growth stagnating in the U.S. because of large stimulus measures. The banks believe loan growth should return to normal as fiscal stimulus declines.

So, if it is just the dividend you want, you can’t go too far wrong with owning TD. It pays a good, well-covered 3.7% dividend. Once Canadian banking regulators allow, this stock will likely see a dividend increase.

Overall, TD is a very strong Canadian institution. It is Canada’s largest retail bank and one of the largest in the U.S. It has a strong balance sheet and excess capital to deploy into acquisitions or share buybacks. For safe, solid dividends, this is not a bad Canadian stock to buy on the recent stock pullback.

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 Corp. and European Residential REIT. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

protect, safe, trust
Dividend Stocks

Worried About a Recession? 2 TSX Blue-Chip Stocks to Protect Your Capital

If you fear a recession coming on soon, here are two blue-chip Canadian stocks to add to your portfolio for…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

New TFSA Investors: 2 Top TSX Stock to Create a Self-Directed Retirement Fund

Top TSX dividend stocks are now on sale for new TFSA investors.

Read more »

money while you sleep
Dividend Stocks

Worried About the Market? 2 Dividend Stocks That Let You Sleep at Night

Here's why Restaurant Brands (TSX:QSR) and Enbridge (TSX:ENB) are two top dividend stocks to buy in this uncertain market right…

Read more »

money cash dividends
Dividend Stocks

How 1 Absurdly Cheap Stock Can Generate $100 in Monthly Passive Income

You can generate $100 or more in monthly passive income from one high-yield stock trading at an absurdly cheap price…

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

How I’d Invest $1000 in February to Make Easy Passive Income

Looking to earn some extra passive income in February but don't have much cash? Build an easy portfolio with these…

Read more »

sad concerned deep in thought
Dividend Stocks

Is it Worth Investing in Rogers or Shaw Before the Pending Merger?

A Rogers stock and Shaw stock deal looks all but certain, yet should investors still buy the stock? Or are…

Read more »

runner ties shoe while stopped on grass outside
Dividend Stocks

Is Nutrien Stock a Buy in February 2023?

Nutrien stock should benefit from the very favourable supply/demand fundamentals in the agriculture business in 2023.

Read more »

Dividend Stocks

Is Brookfield Asset Management a Buy in February 2023?

Brookfield Asset Management is among the largest stocks trading on the TSX. Let's see why BAM stock is a buy…

Read more »