Many Canadians are finding it much more challenging to maintain their lifestyles in today’s high inflationary environment without cutting into their savings. For example, Statistics Canada reported the September inflation in key product groups, including food, shelter, and transportation rising 10.3%, 6.8%, and 8.7%, respectively, year over year.
You can prolong the life of your savings by investing savings you don’t need for a long time. Consider boosting your income generation from dividend stocks that pay generous passive income in this stock market correction. The correction may not be over yet, but you can get yields of up to 7.7% from these stocks.
NorthWest Healthcare Properties REIT
If you have room in your Tax-Free Savings Account (TFSA), you might want to buy some NorthWest Healthcare Properties REIT (TSX:NWH.UN) units for current income. REIT stocks have sold off from rising interest rates. In particular, NWH.UN stock has declined 25% year to date.
Thanks to the price decline, the global healthcare REIT now pays a very generous cash distribution yield of about 7.74%. By holding the units in your TFSA, you can withdraw the income generated tax free to pay for monthly bills.
The defensive REIT’s cash flows are diversified across more than 2,000 tenants. They are also under long-term contracts, which provide highly predictable cash flow. Because the portfolio consists of essential healthcare infrastructure such as hospitals and other healthcare facilities, the REIT maintains a high occupancy of 97%.
At $10.33 per unit at writing, the stock also trades at an awesome discount of close to 29% versus the 12-month analyst consensus price target. It means that buyers of the stock today could earn high income and also see their investment grow in terms of price appreciation.
Another cheap dividend stock for passive income
Bank of Nova Scotia (TSX:BNS) is another cheap dividend stock you can buy some now for juicy income. The high inflationary environment and a looming recession in Canada have been weighing on the Canadian bank stock.
However, BNS is a blue-chip stock with reliable dividends. Through economic cycles, including recessions, the bank has been able to at least maintain its dividend. It wouldn’t be any different this time. Similarly, it’d be a great idea for Canadian investors to buy more shares at undervalued prices during this economic downturn for greater income.
At $64.65 per share at writing, BNS stock trades at a discount of about a third from its long-term normal valuation. As well, it pays investors well to wait with a 6.4% yield.
The bank stock also has a long-term track record of stable growth. For example, in the last decade, it increased its adjusted earnings per share by 5.4% annually. In other words, it’s likely to increase its payout over time and produce more income for its shareholders.
The Foolish investor takeaway
If you embrace the Foolish investing philosophy, you should do well by investing in undervalued dividend stocks such as NorthWest Healthcare Properties REIT and Bank of Nova Scotia stock. Remember to maintain sufficient portfolio diversification while investing your money.
