If you are a Canadian investor looking for some hefty dividend-paying stocks, there are some real bargains on the TSX right now. Some of these stocks face some short-term challenges that are affecting current sentiment.
Yet, overall, their business fundamentals and long-term growth look intact. So, if you are willing to be patient, you can lock in above-average dividend yields at attractive prices. Let’s dig into four TSX dividend stocks that look insanely cheap, even today.
A high-yielding dividend stock on the TSX
Enbridge (TSX: ENB)(NYSE: ENB) pays one of the highest dividend yields you can find on the TSX today. This dividend stock yields around 6.4%. If you put $10,000 into this stock right now, you would be able to collect $160 per quarter.
Despite the massive rise in oil prices over 2021, Enbridge stock has largely lagged its energy peers. However, this dividend stock has a lot of upside potential, especially next year. Enbridge just brought online its largest capital project to date, the Line 3 Replacement Pipeline.
That should meaningfully contribute to cash flow growth next year. Likewise, it has a broad array of natural gas and renewable power projects coming soon. These should contribute to steady mid-single-digit earnings and dividend growth for years ahead.
A top energy stock
Another energy stock that still looks insanely cheap is Cenovus (TSX: CVE)(NYSE: CVE). With a price of $12 per share, it only trades with a forward price-to-earnings (P/E) ratio of seven times. On Wednesday, it announced incredibly strong third-quarter results. The company turned a strong $0.27 per share profit and churned out $1.7 billion of free cash flow.
If oil prices stay stable or rise, Cenovus stock could yield as much as 25% free cash flow next year. Given its strong fundamentals and declining debt, Cenovus announced that it will double its quarterly dividend from 1.75 cents to 3.5 cents per stock. While that is only a 1.1% yield, the company also announced it plans to buy back 10% of its stock as well. That all looks like a very attractive total-return opportunity for shareholders.
A defensive utility stock
One dividend stock that has been beaten down this year is Algonquin Power (TSX: AQN)(NYSE: AQN). Year to date, it is down over 14%. With this dividend stock trading at around $18 per share, it looks like a serious bargain. Today, the market only values this business at $11 billion. It trades with a P/E ratio of 13.
Yet given strong demand for climate-friendly power solutions, it should see high-single digit growth for many years to come. Algonquin recently announced a large utility acquisition in America. The transaction may be dilutive in the near term, but it should be earnings accretive next year. It has a dividend yield of 4.7% and a strong history of about 10% annual dividend growth, so it looks like a great buy here.
Bank stocks are dividend stalwarts
Banks are a staple for many Canadian investors. These dividend stocks have fared well through the pandemic and should see nice upside as the world continues to recover and re-open. One that looks particularly well suited to thrive going forward is Toronto-Dominion Bank (TSX: TD)(NYSE: TD).
It has a great network of retail operations across Canada and the United States. If interest rates are to gradually increase, TD could really benefit from increasing interest margin spreads.
Likewise, TD has a really strong balance sheet with a lot of excess capital. Once regulators allow, some investors are predicting it could raise its already attractive 3.5% dividend by more than 20%. The stocks could rise significantly after such announcements. Consequently, now looks like a solid time to buy this relatively cheap dividend stock.
