1 Oversold Dividend Stock (With a 4.13% Yield) I’m Buying Right Now

It’s not every day that a dividend stock like this hits oversold territory, so grab the passive income while it lasts!

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Goeasy (TSX:GSY) remains one of the most oversold dividend stocks out there right now. Yet, it’s also one of those oversold stocks that remain down from outside influences. So today, we’re going to look at dividend stock goeasy, and why it’s a solid buy right now, even with that outside pressure.

Government weighs in

Goeasy stock was doing incredibly well over the last few years, with the move to online banking and finance providing a major opportunity during the pandemic. Since then, the finance and loan provider stock has come down, yet not from lack of performance.

Goeasy stock continues to be a dividend stock with a solid history behind it, proving even during dire times it can hit record earnings levels. Yet, a recent announcement from the Federal Government back in March sent shares downwards.

The Canadian government announced in its 2023 budget that it would lower the “criminal rate of interest” from 47% to 35%. While analysts certainly knew this would have an effect on Goeasy stock, some state it’s not going to be as bad as some think.

Already lowering rates

As one analyst stated, Goeasy stock has been lowering its rates for years. Now, only 36% of its loan book holds loans above the 35% threshold. So even with this new government decision, management should still see earnings growth at a 20% or above return on equity (ROE).

Even so, analysts still lowered their targets as the immediate future remains unclear. Yet even with this lowering, shares are far below fair value. Even with analysts cutting the dividend stock to around $135 when weighing in, this amount would create a potential upside of 45% as of writing!

Goeasy stock now sits in oversold territory, trading at 10.6 times earnings and with a relative strength index (RSI) at 34.5, which is just within oversold territory. This is already an improvement, as the company was well within oversold territory over the last few months.

Bring in passive income now!

So as you can see, investors are starting to really warm to the idea of reinvesting in goeasy stock once more. The dividend stock may be down because of the government decision, yet the company remains a strong performer that should continue to see major growth through loan originations.

Meanwhile, it holds a dividend yield at 4.13% as of writing. Shares are down 21.5% in the last year, as of writing, and 12% year to date. Yet, these are prices not seen since January 2021! And if it were to reach 52-week highs once more, that’s a potential upside of 55% as of writing. With all that in mind, let’s look at what the next year could look like for investors in this dividend stock with a $5,000 investment.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYTOTAL PORTFOLIO
GSY – now$9354$3.84$207.36quarterly$5,000
GSY – 52-week high$14454$3.84$207.36quarterly$7,776

So you could have returns of $2,776, but add in that $207.36 in annual income and you could have total returns of $2,983.36! The answer then is, yes, I will certainly be feeding into this stock while it remains at such valuable levels for 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 Amy Legate-Wolfe has positions in Goeasy. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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