Dividend investing is a proven way to ensure recurring income streams. People holding dividend stocks usually receive regular payouts every quarter. If time is on your hands, you can grow your money 10-fold by reinvesting the dividends. This February, three value stocks are buying opportunities for income investors.
Laurentian Bank (TSX:LB), Freehold Royalties (TSX:FRU), and Methanex (TSX:MX)(NASDAQ:MEOH) are not only dependable income providers but should also deliver higher long-term returns. Prospective investors could make a fortune over time by taking positions in all today.
Fintech capabilities
Laurentian Bank is a top 10 lender in Canada but outside the Big Six circle. Like its larger industry peers, the $1.92 billion bank announced a dividend hike in the most recent earnings season. If you invest today, the share price is $44.24, while the dividend yield is 4.1%. Current investors are up 10.13% year to date.
The latest news from LB is the strategic partnership with Brim Financial. With the ongoing race to increase financial technology capabilities in the banking sector, management wants to be a step ahead. Besides being a licensed credit card issuer, Brim is one of Canada’s fastest-growing fintech companies.
LB will integrate the fintech’s unique Platform as a Service (PaaS) to accelerate its digital capabilities, simplify its VISA ecosystem, and close foundational gaps in its offering. The partnership will surely fuel LB’s digital transformation and ultimately bring new experiences to customers in 2022.
Lower-risk attractive returns
Freehold Royalties is likely to continue attracting investors this year. The $1.98 billion oil & gas royalty company was among the top-performing dividend-paying stocks in 2021. At $13.15 per share, the trailing one-year price return is 153.11%. Likewise, this royalty stock is a steady performer, given its 76.72% total return (20.86% CAGR) in the last three years.
Management’s objective is to deliver growth and lower-risk attractive returns to shareholders over the long term. Note that the dividend yield has increased five times since late 2020, and the current dividend offer is a generous 5.48%. Freehold creates value from the lease-out programs of its royalty lands that drive oil and gas development.
The high-quality assets ensure consistent overriding royalties for revenue growth. For 2022 and the next several years, Freehold expects to generate modest growth, although it will be on the lookout for exceptional opportunities for portfolio expansion.
Top- and bottom-line growth
Methanex flies under the radar, although it should rise from obscurity in 2022. The $4.3 billion company from Vancouver is the world’s largest producer and supplier of methanol. Methanol is a chemical building block and an essential ingredient in countless industrial and consumer products.
Because of robust methanol prices, management reported outstanding year-over-year growth in revenue (66.6%) and cash flow from operating activities (115.62%) in 2021 versus 2020. Net income rose to US$482 million compared to the US$157 net loss in the previous year.
Based on market analysts’ 12-month average and high price targets, the return potential is between 20.72% and 32.37%. At $57.83 per share (+15.57% year to date), Methanex pays a modest 1.06% dividend.
High-value potentials
Laurentian Bank, Freehold Royalties, and Methanex have bright business outlooks. Their share prices today do not reflect their high-value potential yet. However, you can expect them to rise from their undervalued positions very soon.
