3 Cheap Stocks that Pay You Cash

Plan to boost your cashflow? Consider investing in these cheap, dividend-paying TSX stocks.

| More on:

Image source: Getty Images

Stocks that pay you regular cash add to your financial stability. While several TSX dividend stocks pay you reliable cash, I’ll focus on the cheap ones, namely, dividend stocks that you can buy even with a small amount of capital. So, if you’re looking to generate a passive income stream through stocks, here are my top three picks. 

Algonquin Power & Utilities

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) operates a low-risk utility business and is a safe stock to own for regular income. Thanks to its conservative business model and steady cash flows, Algonquin stock is less volatile and consistently enhances shareholder returns through regular dividend payments in all market conditions. 

For context, Algonquin has raised its dividend for 12 consecutive years. Moreover, its solid rate base and earnings growth guidance indicate that the utility could continue to increase its dividend at a solid pace in the coming years. 

Algonquin projects its rate base to increase at an annualized rate of approximately 15% over the next five years, driving its earnings and dividend payments. Thanks to the growth in rate base, Algonquin expects adjusted earnings to increase by 7-9% annually during the same period. 

Its rate-regulated business, long-term contractual arrangements, growing renewable power generation capabilities, and solid earnings growth guidance indicate that investors can earn reliable passive income. Further, its payout ratio of 80-90% and a high dividend yield of 5% is attractive and sustainable in the long-term.

AltaGas

AltaGas (TSX:ALA) generates solid cash through its utility and energy infrastructure that supports its payouts. Further, its long-term commercial contracts support its financials and higher dividend payments. What stands out is that three-fourths of AltaGas’ adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) come from assets backed by medium-to long-term contracts. This adds stability and visibility to its cash flows. 

Thanks to this solid asset base and growing rate base, AltaGas has consistently paid and raised its dividends. AltaGas predicts its dividend will continue to increase at an annualized rate of 5-7% through 2026.  

This dividend growth guidance is backed by an expected 8-10% annualized growth in its rate base. Further, higher export volumes (projected to increase at a compound annual growth rate of 10%) in its midstream operations will support its dividend payments.

Its solid asset mix, strong dividend growth forecast, and dividend yield of 3.6% make AltaGas a reliable investment to derive regular cash. 

Telus 

Telecom giant Telus (TSX:T)(NYSE:TU) is a popular stock for investors seeking reliable income. Telus’ ability to grow its customer base and deliver consistent profit supports its payouts. It’s worth mentioning that Telus has returned multi-billion dollars to its shareholders through dividend payments since 2004. Meanwhile, through its dividend growth program, it expects to grow its dividend at a mid to high-single-digit rate in the coming years. 

Telus’ investments in network infrastructure, expansion of the PureFibre network, and growing 5G coverage will likely drive further growth. Lower churn (below 1%) and impressive customer loyalty are additional advantages. 

Overall, Telus’ ongoing business momentum and ability to grow its earnings indicate that the telecom could continue to boost its shareholders’ returns. Meanwhile, investors can earn a well-protected dividend yield of 4.5% by investing in this stock at current levels. 

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 TELUS CORPORATION.

More on Dividend Stocks

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

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in June

Dividend stocks like Brookfield Asset Management (TSX:BAM) can be great RRSP holdings.

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 »