3 Cheap Canadian Stocks With Yields of 6% or More

Given their cheaper valuation and high dividend yields, these three Canadian stocks are excellent buys in this volatile environment.

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After a bright start to 2023, the Canadian equity markets have been under pressure over the last few weeks amid the fear of the Federal Reserve adopting stricter monetary policies due to the resilient economy. The failure of Silicon Valley Bank has dragged the equity markets down, with the S&P/TSX Composite Index falling over 6% from its February highs.

Meanwhile, the selloff offers excellent buying opportunities in the following three stocks that pay dividends at a healthy yield of over 6%.

TC Energy

TC Energy (TSX:TRP) is an energy infrastructure company that transports oil and natural gas across North America. It also operates or has an interest in seven power-producing facilities, with a total power-generating capacity of 4,200 megawatts.

Amid the broader weakness and an order from the United States regulator to lower the operating pressure of its Keystone pipeline system, the company has lost around 28% of its stock value from its 52-week high. Amid the pullback, the company trades at an attractive valuation, with its NTM (next 12-month) price-to-sales and NTM price-to-earnings multiples at two and 17.7, respectively.

Meanwhile, TC Energy operates a highly regulated business, with around 95% of its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) underpinned by rate-regulated assets or long-term contracts. Supported by its low-risk, regulated business, the company has raised its dividend for 23 consecutive years, while its forward yield is at 6.92%.

Further, the company is continuing its $34 billion secured capital program, which could grow its adjusted EBITDA at an annualized rate of 6% through 2026. So, given its underlying regulated business and healthy growth prospects, I believe TC Energy’s payouts are safe, making it an excellent buy for income-seeking investors.

NorthWest Healthcare Properties REIT

NorthWest Healthcare Properties REIT (TSX:NWH.UN) is another stock that has been under pressure due to rising interest rates. It has lost around 36% of its stock value compared to its 52-week high, dragging its price-to-book multiple down to an attractive 0.9.

Meanwhile, the company owns and operates 233 healthcare properties across eight countries. The company has signed long-term lease agreements with its tenants, with the weighted average lease expiry at 14.1 years. Most of its tenants have government backing, improving its occupancy and collection rate. Further, around 82% of its rent is inflation indexed, thus protecting its financials against price rises.

Supported by these factors, NorthWest Healthcare generates healthy cash flows, allowing it to pay monthly dividends at a higher yield. It currently pays a monthly dividend of $0.067/share, with its forward yield at 8.64%. Further, the company is expanding its footprint in the United States, Canada, and the United Kingdom through acquisitions and joint ventures. Considering all these factors, NorthWest Healthcare is an ideal buy during this volatile period.

BCE

BCE (TSX:BCE) is among the top three Canadian telecom players. Given the capital-intensive nature of its business, the company has been under pressure over the last few weeks due to rising interest rates. The company has lost 19% of its stock value compared to its 52-week high, while its NTM price-to-sales multiple has declined to 2.2.

Meanwhile, the company has made an accelerated capital investment of $14 billion from 2020 to 2022, expanding its 5G and broadband infrastructure. With these investments, the company has expanded its 5G network to cover 82% of the country’s population and completed 80% of its planned broadband internet buildout program. So, amid the growing demand for internet services in this digitally connected world, these expansions could boost the company’s financials in the coming years.

So, BCE, which has raised its dividend by over 5% annually for the last 14 years, is well equipped to continue with its dividend growth. Its dividend yield for the next 12 months is at 6.44%. So, I believe BCE could be an excellent buy to boost your passive income.

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 Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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