North American markets were shaken by volatility in the month of September. Investor fears have been stirred by rising inflation, the lingering COVID-19 pandemic, and by political uncertainty, as the Biden administration hopes to push through a multi-trillion-dollar infrastructure package. TFSA investors may want to re-orient their strategy in this environment. Today, I want to look at three undervalued dividend stocks that can offer stability and income in the near term.
TFSA investors should scoop up this top insurance stock
Manulife Financial (TSX: MFC)(NYSE: MFC) is a Toronto-based company that offers insurance and financial services to a domestic and global consumer base. Shares of this dividend stock have climbed 9.4% in 2021 as of close on October 1. However, the stock has plunged 10% over the past six months. I’d suggested that investors should target Manulife back in May. Manulife is still a good target for TFSA investors.
The company unveiled its second-quarter 2021 results on August 4. Net income rose to $2.6 billion — up from $1.9 billion in the second quarter of 2020. Meanwhile, core earnings increased 18% to $1.7 billion. It delivered Global Wealth and Asset Management net inflows of $8.6 billion — up from $5.1 billion in the previous year.
Shares of this dividend stock possesses a very attractive price-to-earnings (P/E) ratio of 6.7. It last paid out a quarterly distribution of $0.28 per share. That represents a solid 4.5% yield.
Don’t sleep on this dependable dividend stock in 2021
Canadian National Railway (TSX: CNR)(NYSE: CNI) is a Montreal-based company that is engaged in the real and related transportation business. This dividend stock has climbed 6.4% in the year-to-date period. Its shares have dropped 4.1% month over month. TFSA investors on the hunt for stability should consider this reliable transportation titan.
Investors can expect to see CNR’s third-quarter results later this month. It released its second-quarter 2021 earnings on July 20. Revenues rose 12% from the prior year to $3.59 billion. Moreover, operating income climbed 76% to $1.38 billion. CNR has benefited from a resurgence in the broader Canadian economy. It reaffirmed its full-year guidance for double-digit adjusted diluted earnings-per-share growth.
This dividend stock last had a solid P/E ratio of 26. It offers a quarterly dividend of $0.615 per share, representing a 1.6% yield.
One more super dividend stock to hold in your TFSA forever
Royal Bank of Canada (TSX: RY)(NYSE: RY) is the top bank in Canada and the top stock on the TSX by market cap. This dividend stock can provide TFSA investors with a nice balance of growth and steady income. Shares of Royal Bank have climbed 20% in 2021. The stock has dropped 2.9% over the past month.
In August, I’d suggested that investors snag Royal Bank after its third-quarter earnings release. It delivered net earnings growth of 34% to $4.3 billion and diluted earnings per share increased 35% to $2.97. Net income in its Personal and Commercial Banking segment jumped 55% to $2.11 billion. Like CNR, Royal Bank has been able to ride the wave of a rebounding economy.
Shares of this dividend stock possess a favourable P/E ratio of 11. TFSA investors can gobble up its quarterly distribution of $1.08 per share. That represents a 3.4% yield.
