2 TSX Stocks Trading at Buy-Now Prices

Are you looking for high-quality dividend stocks trading for a discount? Here are two TSX stocks you can add to your self-directed portfolio.

| More on:
Hand writing Time for Action concept with red marker on transparent wipe board.

Image source: Getty Images

The Canadian stock market has had a tough year in 2022. The stellar rise for Canadian equity securities after the initial shock of the pandemic wore off seems like a distant memory. Record inflation and rising interest rates have significantly slowed down economic activity. As the cost of everything keeps rising, and borrowing becomes increasingly expensive, most stocks are trading for deep discounts.

The S&P/TSX Composite Index is down by 12.44% from its 52-week high as of this writing. The Canadian benchmark equity index’s weakness reflects the state of the stock market. While declining valuations across the board are worrisome, the downturn also presents an opportunity to find and invest in high-quality, undervalued stocks.

Buying the stock of top-notch, publicly traded companies trading for lower than their intrinsic values can set you up for substantial long-term gains after the markets recover. With the top dividend stocks, lower valuations have also inflated their dividend yields, allowing you to lock in high-yielding returns.

Today, I will discuss two undervalued TSX dividend stocks that are too attractively priced to ignore for your portfolio.

Fortis

Fortis (TSX:FTS) is a $25.54 billion market capitalization Canadian utility holdings company. It owns and operates several natural gas and electricity utility businesses in Canada, the U.S., the Caribbean, and Central America.

Since most of its business is in regulated markets, Fortis generates largely predictable cash flows that allow the company’s management to comfortably fund its growth projects and grow shareholder dividends. Its 49-year dividend-growth streak makes it a top Canadian Dividend Aristocrat to own.

As stable as the business is, Fortis relies on taking a heavy debt load like most utility businesses. Higher interest rates have impacted its price performance in the short term and resulted in a steep decline for the reliable dividend stock this year.

As of this writing, Fortis stock trades for $53.35 per share, down by 18.25% from its 52-week high. Its discounted valuation has seen its dividend yield grow to a juicy 4.24%, making it an attractive investment to buy and hold right now.

Northland Power

Northland Power (TSX:NPI) is a $9.61 billion market capitalization Canadian power producer. The company owns, develops, builds, and operates clean and green energy infrastructure assets worldwide, capitalizing on the growing demand for greener alternatives to fossil fuels.

Renewable and green energy is slated to become the energy industry’s future, phasing out traditional energy reliance. Northland Power is a company well positioned to leverage that demand.

As of this writing, however, Northland Power stock trades for $39.37 per share, down by 18.25% from its 52-week high. Being a key player in the energy industry and with a 14-gigawatt backlog, Northland Power has plenty of room to grow.

It pays its shareholders at a juicy 3.05% dividend yield, which is inflated due to its discounted share price. It can be an excellent addition to your portfolio at current levels for long-term growth and substantial dividend income.

Foolish takeaway

Finding and investing in undervalued but reliable dividend stocks can be an excellent way to grow your wealth in the long term. Investing at discounted share prices can grow your wealth through capital gains in the long run.

Additionally, you can make the most of the dividend income they have to offer by investing when these stocks deliver higher-than-usual returns through their payouts.

Fortis stock and Northland Power stock can be excellent additions to your self-directed investment portfolio for this purpose.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends FORTIS INC. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »