There are many extraordinary dividend deals for contrarian investors looking for a good bang for their buck. The mood is quite mixed going into the spring season, with a recession closing in, ongoing rate hikes, lingering inflation, and the U.S. banking crisis fresh in the minds of many.
Just because a recession is on the horizon doesn’t mean investors should hibernate. The next bull market is never too far away in the late stages of a bearish decline. When investors begin to lose hope, the risk/reward scenario tends to be a lot better for those willing to put money to work over the long haul.
In this piece, we’ll check out two TSX dividend stocks with swollen dividend yields and contracted valuation multiples. Each name seems more than worth picking up this April.
Without further ado, consider Bank of Montreal (TSX:BMO) and Restaurant Brands International (TSX:QSR).
Bank of Montreal
Bank of Montreal is a Big Six Canadian bank with considerable U.S. exposure. After closing its Bank of the West deal, Bank of Montreal now stands out as a bank to play growth on both sides of the border. With the failure of Silicon Valley Bank fresh in the minds of investors, the banks with regional exposure have taken a bit of a hit to the chin.
Though BMO stock has been a turbulent ride of late, plunging from $135 per share 52-week high to around $115 in change, I still view the big bank as a magnificent long-term hold for passive-income seekers while the dividend yield is swollen. The stock yields 4.75% and looks like a prime pick-up, as shares look to regain their footing after a U.S. banking scare that may be poised to settle with time.
At around 6.1 times trailing price to earnings (P/E), BMO stock also trades at a discount to the historical range. Yes, there are headwinds that will hit coming quarters. But if you seek a big dividend at a modest multiple, I think there are few options better than the name at these depths.
Restaurant Brands International
Restaurant Brands International is a Canadian fast-food firm that’s really flexed its muscles in recent months, even as macro headwinds moved in.
At just shy of $90 per share, QSR stock now trades at a 20.5 times trailing P/E multiple alongside a juicy 3.32% dividend yield. While QSR stock may still be off its 2019 highs, I think few things are stopping the firm behind Burger King, Tim Hortons, and Popeyes Louisiana Kitchen, as it looks to make up for lost time.
Recently, analysts over at TD Cowen pounded the table on the fast-food behemoth, noting that a turnaround over at Burger King in the U.S. was on the horizon. With Patrick Doyle calling the shots, I think Burger King could become a major earnings driver over the next year.
It will be interesting to see how Doyle can help bolster the brand and whether he’d be willing to help other chains in the QSR umbrella. In any case, it’s hard not to be a bull after Cowen’s latest upgrade.
