3 TSX Stocks I’d Buy for Passive Income and Double the Value

Intact Financial (TSX:IFC) and two other passive income stocks that are rich in value in December 2022.

| More on:
A red umbrella stands higher than a crowd of black umbrellas.

Source: Getty Images

Once 2023 earnings come due, there’s a good chance that the earnings erosion may not be as bad as we thought. Indeed, things can always get worse, but they also can get better. In a bear market, it’s easy to think of worst-case scenarios, even though they may not be the most probable of outcomes!

Downside risks may seem high here, but I think it’s safe to say that it’s far lower than it was at this time last year! Last holiday season, stocks were dancing on a knife’s edge. This year, we may be closer to turning a corner than experiencing another free fall.

Despite the tough terrain, there are many reasons to stay the course and continue buying TSX stocks that offer the perfect mix of passive income (dividends) and value. The lower a stock goes, the higher its yield will rise. The following names, I think, provide a good mix for value-conscious passive income investors.

Canadian insurance stocks look ripe to buy

That’s why I’m sticking with stocks over bonds. In this piece, we’ll look at Manulife (TSX:MFC), IA Financial (TSX:IAG), and Intact Financial (TSX:IFC). The three Canadian insurers look rich in value, with yields that will likely survive the coming economic onslaught.

Manulife is arguably the most popular insurance stock in the country, not just for its size ($45.1 billion market cap), but its juicy 5.5% dividend yield and most promising growth profile. Asia is a huge market that could lift Manulife once the worst of the recession storm is over. It’s hard to imagine a global bull market when waiting for a recession to hit. In any case, MFC stock remains a deep-value play I’d hold for the long run while shares trade at 6.4 times trailing price-to-earnings (P/E). That’s way too cheap for an insurer that’s gone nowhere far (down 10%) in the past five years.

IA Financial and Intact are lesser-known insurers that may be even better bets at this market crossroads. IA is a mere $8.2 billion insurer and wealth manager with a more domestic focus than other big insurers. The stock trades at 10.5 x trailing P/E, with a 3.46% dividend yield. It’s pricier and less bountiful than Manulife. Still, the stock has been more productive in the last five years, advancing more than 31%.

Finally, Intact is a very compelling growthy insurer in the property and casualty insurance business. The stock has held up far better than the TSX Index, down less than 5% from its recent peak. With a 13.1 trailing P/E and a 2.% dividend yield, IFC makes for a great total-return play for investors seeking the optimal mix of total returns over the medium- and long-term.

Best buy for TSX stock investors?

You can’t go wrong with any of the three. If I had to choose one, I’d go with Manulife. It’s the cheapest, with the biggest dividend and the most upside in the face of the next bull market. The bear will be unkind in the meantime, so brace yourself for more volatility.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Intact Financial. The Motley Fool has a disclosure policy.

More on Investing

Doctor talking to a patient in the corridor of a hospital.

TFSA: Healthcare Dividend Stocks Are Perfect for Passive Income

Top healthcare dividend stocks like Extendicare Inc. (TSX:EXE) and others can provide huge passive income in your TFSA.

Read more »

TFSA and coins
Tech Stocks

TFSA: Invest in These 2 Stocks for a Legit Chance at $1 Million

Are you interested in building a $1 million portfolio? Invest $20,000 in these two stocks!

Read more »

edit Person using calculator next to charts and graphs

The Top TSX Stock on My Watch List Right Now

Here's why Alimentation Couche-Tard (TSX:ATD) remains a top TSX stock that long-term investors seeking growth and yield will want to…

Read more »

Hourglass projecting a dollar sign as shadow

3 Stocks to Add to Your TFSA ASAP

Given their stable cash flows and solid underlying businesses, these three stocks are excellent additions to your TFSA in this…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

Better Buy: Fortis Stock vs Enbridge

Fortis stock and Enbridge are top dividend stocks on the TSX today. Which stock is better buy for safe dividend…

Read more »

Canadian Dollars
Dividend Stocks

How to Make $1,500 in Passive Income 4 Times a Year

Blue-chip TSX stocks such as Enbridge can enable investors to create game-changing wealth over the long term.

Read more »

Woman has an idea

5 Stocks You Can Confidently Invest $500 in Right Now

Consider putting your surplus cash in these stocks for stellar capital gains.

Read more »

Dividend Stocks

TFSA: How to Easily Turn $10,000 Into $500/Year of Passive Income

You don't need to be a stock market expert to turn $10,000 into a $500 of tax-free passive income. Here's…

Read more »