Stock market corrections are great times to buy high-quality dividend stocks while they are undervalued. Not only can you pick the stocks up at cheap prices, but their dividend yields (the annual cash dividends earned on the price you pay) are also elevated.
As a result, you can buy a great business and lock in a high dividend on your cost. If you are looking for some incredibly undervalued TSX dividend stocks, here are four to consider today.
A stock for value, elevated growth, and dividend income
For a strong combination of growth and income, goeasy (TSX: GSY) is an attractive TSX stock. It is down 36% this year. At a price of $114, this stock trades with an attractive 3.25% dividend yield.
That is significantly above its five-year average yield of 2.5%. Likewise, this stock trades for a ridiculous bargain at nine times earnings. goeasy is one of Canada’s largest non-prime lenders. Through new services and acquisitions, it has quickly been capturing market share.
Over the past 10 years, it has delivered a 1,540% capital return. It has ample opportunities to keep growing its business. Now is a great time to buy its stock at an attractive discount and an elevated dividend yield.
A blue-chip stock for dividend growth
Canadian National Railway (TSX: CNR)(NYSE: CNI) stock does not pay a high dividend. At $144 per share, it only earns a 2% dividend yield today. However, that is above its five-year average of 1.65%.
This company has been a dividend-growth machine. Since 2012, it has grown its dividend annually by a compounded rate of 14.4%. Its current $2.88 annual dividend per share is 284% larger than it was 10 years ago.
CNR stock is down 10.4% this year. It is never “cheap.” Yet it is trading at its lowest valuation since April 2020 (just after the pandemic market crash). For a high-quality, defensive business, it looks like a deal today.
An undervalued industrial real estate stock
Another ultra-cheap dividend stock is Dream Industrial REIT (TSX: DIR.UN). This is one of the cheapest industrial real estate stocks you can find. Over the past few years, it has done an incredible job of expanding its portfolio, reducing debt, and earning over 10% cash flow-per-unit growth.
Industrial real estate has been incredibly resilient over the past few years. E-commerce and onshore manufacturing trends have led to very strong demand and fast rental rate growth.
After an 18% decline this year, Dream Industrial stock trades for a near 5% dividend yield. For a great monthly dividend and a stock trading below its private market value, this is a bargain today.
A cheap apartment REIT
European Residential REIT (TSX: ERE.UN) is a TSX real estate stock with 100% of its portfolio in the Netherlands and Western Europe. It is a great way to get exposure to the incredibly tight housing market in the Netherlands.
It has perpetually low vacancy and strong rental rate growth. This is helping drive high single-digit earnings growth. Like Dream Industrial, this is one of the cheapest apartment REITs you can find. Yet in many instances, its growth and quality are superior to many peers.
It pays a monthly $0.013 distribution, which equals a 3.4% annual yield. It just raised its distribution by 9%. That is its second increase in the past two years. For income, growth, and value, this is a great long-term dividend stock to hold.
