3 Oversold Stocks to Buy for Passive Income

These three oversold stocks aren’t just great right now for high passive income, but provide exposure to high-growth industries.

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Some of the best stocks for long-term investors include those providing passive income. And yet some of those amazing stocks are in oversold territory as of writing! Today, I’m going to focus on the top three oversold stocks that I would consider to lock in passive income at absurdly high rates.

Brookfield Renewable

Brookfield Renewable Partners (TSX:BEP.UN) currently trades at a relative strength index (RSI) of just 26. That’s far below oversold stocks territory where the RSI hits 30 and lower. But what’s more, there are a few other fundamentals showing why Brookfield Renewable stock is such a great deal.

It’s one of the oversold stocks also trading at just 1.86 times book value. Further, it would take 102% of its equity to cover all of its debts. This is just over where it should be but is still relatively stellar considering how poorly the market is performing right now.

What’s more, you can lock in Brookfield Renewable stock with a dividend yield of 4% and at prices we haven’t seen since February 2022. Shares are down 3.3% year to date, after falling from a bump a few months back. So, again, long-term investors seeking entrance into the renewable energy sector would do well to consider this stock.

Scotiabank

The Big Six banks are some of the best buys during a market downturn, even though they are some of the first to drop. While it seems weird, if you look in the past, there’s a clear reason why. These banks are some of the first to recover. That’s pretty much all thanks to provisions for loan losses.

So, it’s pretty ridiculous that Bank of Nova Scotia (TSX:BNS) is in oversold territory, with an RSI of 29.08. But the loss of others is your gain, as you can now pick up Scotiabank stock with a dividend yield at 6.28%! And that dividend is nearing Dividend King status, as the stock has increased its dividend for the last 43 consecutive years!

Plus, Scotiabank stock trades in value territory, trading at just 7.71 times earnings as of writing. And it has a lot to look forward to as well. While Scotiabank stock has most of its investments in Canada, most of its other investments are in emerging markets. So, it’s a strong choice for long-term holders among oversold stocks.

SmartCentres REIT

Finally, if you’re looking for passive income, then you’re already likely to be looking at real estate investment trusts (REIT). But don’t just consider any of them. Look for those that have access to current and growing exposure in strong industries.

That’s what you get with SmartCentres REIT (TSX:SRU.UN). SmartCentres stock has its stake in commercial properties right now, sure. But its residences are expanding and will soon include many retirement residences as well. Furthermore, it’s also growing its exposure in the industrial properties space, providing a cheap investment into a market that’s becoming increasingly necessary.

Yet SmartCentres stock trades at just 4.08 times earnings and has just exited oversold territory, now trading at a 41 RSI. So, while it’s now not technically one of the oversold stocks, I would still consider SmartCentres stock — especially with shares down 15% year to date and a killer 6.92% dividend yield.

Bottom line

Not only are all of these oversold stocks cheap, but they offer access to growing industries. These are therefore solid stocks I would consider for long-term holds, especially if you’re looking for a large amount of passive income while you wait.

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 Amy Legate-Wolfe has positions in Brookfield Renewable Partners. The Motley Fool recommends BANK OF NOVA SCOTIA and Smart REIT. The Motley Fool has a disclosure policy.

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