3 TSX Growth Stocks That Pay You to Wait

Get paid decent dividend income while you wait for price appreciation from this diversified group of TSX growth stocks.

| More on:
potted green plant grows up in arrow shape

Image source: Getty Images

Wouldn’t it be nice to receive income while waiting for price appreciation from your stocks. Here are three TSX growth stocks from three different sectors that could do just that!

A Canadian bank stock that pays an awesome dividend

The Big Six Canadian bank stocks often steal the limelight for delivering decent long-term returns and stable dividends. Over the next three to five years, smaller Canadian Western Bank (TSX:CWB) has the potential to deliver much stronger returns from being a cheaper stock now. Higher earnings growth can also turn into higher returns as well.

At about $28 per share, the Canadian bank stock trades at about 7.7 times earnings, which is a discount of roughly 30% from the industry multiple. Compared to its own long-term normal valuation, the value stock trades at even a steeper discount of 36%.

Importantly, the bank stock’s dividend yield of 4.4% is safe. Its trailing 12-month (TTM) payout ratio is 38% of net income available to common stockholders. Also, it has a 30-year dividend-growth streak. Its 10-year dividend-growth rate (DGR) is 7.6%, which competes well with its big Canadian bank peers. If things go smoothly, the dividend stock could double investors’ money in a few years.

Magna International stock is depressed

Auto part maker Magna International’s (TSX:MG)(NYSE:MGA) business results have been pressured by a number of factors, including from supply disruptions, higher inflation, and higher labour costs. A reverse of some of these events can drive above-average price appreciation in the cyclical stock over the next three to five years.

At roughly $83 per share, Magna stock yields 2.8%. Analysts’ average 12-month price target represents 30% near-term upside potential, which suggests the stock trades at a cheap forward valuation. Over the next few years, it could deliver a double-digit rate of return.

Magna’s track record of increasing dividends is also a confidence booster for investors. It has increased its dividend for about 12 consecutive years with a 10-year DGR of 13.2%. The cyclical company maintains a sustainable payout ratio to protect its dividend through the ups and downs of the economic cycle. For example, its TTM payout ratio was 76% of net income and 58% of free cash flow.

Savaria could be on the verge of turning around

Savaria (TSX:SIS) is the smallest stock of the three with a market cap of less than $1 billion. However, it’s a small stock with big growth prospects. Its portfolio of products improves the accessibility of seniors. Since the aging population is growing around the globe at a higher rate, the global company can benefit from increased demand.

The company is also known to make acquisitions, which could be catalysts for growth as well as make it a bumpy ride to hold the stock. SIS stock has generated out-of-this-world returns for long-term investors. For example, an investment from 10 years ago grew investors’ money 12-fold, turning $10,000 into about $123,127!

After selling off significantly in the last year, Savaria stock has based and may be starting another upward trend. At least, analysts think it has 49% upside over the next 12 months. Meanwhile, it yields 3.4% and is also a Canadian Dividend Aristocrat, like the other two stocks.

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 Kay Ng has positions in Canadian Western Bank, Magna Int’l, and Savaria Corp. The Motley Fool recommends Magna Int’l and Savaria Corp.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

How Much to Invest to Get $500 in Dividends Every Month

These three monthly paying dividend stocks could help you earn over $500 monthly in passive income.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

TFSA Maxed Out? Here Are 5 Other Ways to Grow Your Wealth in Canada

Canadians have other options to grow wealth after maxing out their TFSA contribution limits.

Read more »

A man smiles while playing a video game.
Dividend Stocks

RRSP: 2 High-Yield Dividend Stocks to Consider Now

These top TSX dividend stocks offer attractive yields today for RRSP investors.

Read more »

edit Sale sign, value, discount
Dividend Stocks

2 Bargain Stocks You Can Buy Today and Hold Forever

These two stocks are reliable and trade ultra-cheap, making them among the best TSX stocks to buy now and hold…

Read more »

Person holds banknotes of Canadian dollars
Dividend Stocks

Top 3 Dividend Stocks Yielding Over 7% to Buy in June 2024

Are you looking for the best of the best dividend stocks? These three are the ones that belong on your…

Read more »

Dividend Stocks

RRSP Investors: Buy These Top Dividend Stocks for Total Returns

RRSP investors can consider adding blue-chip dividend stocks such as Tourmaline Oil to their equity portfolios in 2024.

Read more »

Payday ringed on a calendar
Dividend Stocks

This 8.9 Percent Dividend Stock Pays Cash Every Month

You can forget about risks related to short-term market volatility and buy this high-yield monthly dividend stock to expect solid…

Read more »

Dividend Stocks

How to Build a Monthly Passive-Income Stream With Canadian REITs

These two monthly dividend stocks will create passive income you can live off of for life, and now is the…

Read more »