4 Fundamentally Strong Dividend Stocks Under $40

Thanks to their reliable dividends and resilient businesses, investing in these under-$40 stocks could be highly rewarding for investors amid the current volatile environment.

| More on:

Image source: Getty Images

Buying stocks that consistently pay solid dividends can be rewarding amid uncertain times. Besides offering regular income, dividend stocks are relatively stable, which reduces the downside risk of your portfolio. However, not all dividend-paying companies are worth investing in, and investors should assess how well a company’s payouts are covered. 

With stable dividend earnings in the backdrop, let’s look at four top Canadian corporations that investors can easily rely upon for safe dividend income. What’s more? Shares of these dividend-paying companies are trading under $40. 

Telus 

Telecom giant Telus (TSX:T)(NYSE:TU) has consistently delivered profitable growth and enhanced its shareholders’ value through its dividend-growth program. It’s worth mentioning that Telus has returned about $16 billion to its shareholders in the form of dividends since 2004. 

Its large and growing customer base and diversified asset mix augur well for future earnings growth. Further, accelerated investments in 5G, broadband build, and enhanced product development provide a multi-year growth opportunity. By investing in Telus stock, investors will get a yield of 4.5%. 

Algonquin Power & Utilities

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) is a safe stocks to buy for generating consistent income irrespective of the market conditions. It operates a conservative business underpinned by contractual arrangements and a rate-regulated asset base. 

It’s worth mentioning that Algonquin Power has raised its dividend for more than a decade. Furthermore, its dividend increased at a CAGR of 10% during that period. Its rate-regulated assets add visibility over future cash flows and payouts and easily cover its dividend payments. 

Algonquin Power expects to grow its earnings by 7-9% in the coming years, which augurs well for future payouts. The company’s earnings guidance is backed by continued growth in its rate base, which Algonquin Power predicts to increase by the mid-teens rate over the next five years. Algonquin Power stock trades cheap and offers a reliable yield of 5.2%.

AltaGas

AltaGas (TSX:ALA) stock offers income and growth. Its low-risk, rate-regulated assets easily cover its dividend payouts. Meanwhile, its high-growth midstream operations support its overall financials. AltaGas is confident of expanding its rate base by 8-10% annually through 2026. Moreover, it expects export volumes to grow at a CAGR of 10% during the same period. 

It recently announced a 6% hike in its 2022 dividend. Furthermore, it expects to grow its future dividend by a CAGR of 5-7% over the next five years. AltaGas stock has remained resilient so far in 2022 and offers a yield of 3.6%.

NorthWest Healthcare Properties REIT

Investors can earn a stable income by investing in a REIT (real estate investment trust). Meanwhile, NorthWest Healthcare (TSX:NWH.UN) appears to be an attractive investment option within REITs. 

It owns a diversified and defensive portfolio of healthcare real estate assets that consistently generate strong cash flows and support its dividend payouts. Furthermore, its tenants are supported by the government. Also, NorthWest Healthcare benefits from the long lease expiry term, which adds visibility over future payouts. Meanwhile, its occupancy remains high. 

It’s worth noting that most of NorthWest’s rents are inflation indexed. Moreover, the stock offers a high yield of 6.3%. 

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends ALTAGAS LTD., NORTHWEST HEALTHCARE PPTYS REIT UNITS, and TELUS CORPORATION.

More on Dividend Stocks

edit Person using calculator next to charts and graphs
Dividend Stocks

Better Buy: Fortis Stock vs Enbridge

Fortis stock and Enbridge are top dividend stocks on the TSX today. Which stock is better buy for safe dividend…

Read more »

Canadian Dollars
Dividend Stocks

How to Make $1,500 in Passive Income 4 Times a Year

Blue-chip TSX stocks such as Enbridge can enable investors to create game-changing wealth over the long term.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

TFSA: How to Easily Turn $10,000 Into $500/Year of Passive Income

You don't need to be a stock market expert to turn $10,000 into a $500 of tax-free passive income. Here's…

Read more »

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 »