3 Canadian Dividend Stocks for Value Hunters

Dividend stocks like Suncor Energy offer good value for bargain hunters.

| More on:

Image source: Getty Images

Are you a value hunter?

If so, you may be interested in picking up high quality value stocks that also pay dividends. Value- and dividend-based investing strategies tend to overlap, because most “value” sectors (banking, energy, utilities etc.) tend to pay dividends. That’s not to say that value investing and dividend investing are the same thing. Value investors focus on cheapness, dividend investors focus on income. But there’s a lot of overlap. With that in mind, here are three quality dividend stocks for value hunters to consider in May 2023.

Bank of Nova Scotia

The Bank of Nova Scotia (TSX:BNS) is a value stock trading at eight times earnings and only at a slight 7% premium to book value. It is also a high-dividend stock with a 6% yield. BNS is sometimes thought of as riskier than other Canadian banks. It has a large presence in Latin America, a region whose markets aren’t as well regulated as Canada’s are. Also, its growth over the last five years has been worse than that of Royal Bank and Bank of Montreal: it has only grown its revenue by a 3% CAGR and earnings by a 1.3% CAGR over that period.

Nevertheless, BNS stock has become so cheap that its dividend alone is enticing. For certain, 6% is higher than the yield you get on treasuries, even after all of the Bank of Canada’s many interest rate hikes. It might be worth it for an investor seeking consistent income, who isn’t too concerned about overall return.

Suncor Energy

Suncor Energy Inc (TSX:SU) is a Canadian energy stock with a P/E ratio of five and a 5% dividend yield. It is best known for its gas station chain, Petro Canada, which serves gasoline all over the country. It’s also involved in refining and exporting oil to the United States.

Suncor Energy did very well last year. It delivered large increases in revenue and earnings in all of its quarters. For example, in the fourth quarter, it did:

  • $4.2 billion in funds from operations, up 43%.
  • $3.9 billion in cash from operations, up 50%.
  • 689 million barrels of oil produced per day, up 3.6%.
  • $2.7 billion in net income, up 80%.

The quarter was pretty strong. Most likely, the growth in the first quarter wasn’t as good, because oil prices in Q1 2023 were lower than in Q1 2022. Nevertheless, Suncor managed to pay off a lot of debt last year, so the earnings could be better than expected.

Cenovus Energy

Cenovus Energy (TSX:CVE) is an oil company similar to Suncor Energy. Much like Suncor, it extracts and refines oil. It recently exited the gas station business after some investors convinced it that the business was holding it back. The integrated energy company is the kind of company that will do well as long as oil prices are pretty high. Cenovus is a disciplined, well-run company that paid off a large amount of debt last year with its windfall profits. So now, it’s in a position to profit again in 2023, even though oil prices aren’t as high as they were last year.

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 Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Parents: Here’s How to Boost Your Monthly Income

Parents, you have enough to worry about. But if you can put aside even $40 per month, that can create…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Looking for a Reliable Retirement Income? Consider These Dividend-Paying Stocks

Investors looking to establish a reliable retirement income have no shortage of options to choose from. Here's a trio of…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

3 Oversold Dividend Stocks That Could Make You Rich When They Bounce Bank

Don't wait around for these oversold dividend stocks to bounce back, each certainly will, which is why now is the…

Read more »

A small flower grows out of a concrete crack.
Dividend Stocks

Down 8% Last Month, Canadian Tire Stock Is a Deal Heading Into June 2023

May wasn't a good month for the stock, but June has been different from the beginning and may present an…

Read more »

Canadian Dollars
Dividend Stocks

Need Passive Income Right Now? Turn $20,000 Into $152 Every Month

This dividend stock may be down now, but offers substantial passive income through its 9.31% dividend yield as of writing!

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

Is Exchange Income Stock a Buy?

Even within an industry, some stocks might be worth considering in certain market conditions, while others may be avoided.

Read more »

Dividend Stocks

2 Top Canadian Value Stocks in June 2023

Canadian Imperial Bank of Commerce (CIBC) stock is a compelling buy in June, and so is this Canadian REIT.

Read more »

Illustration of bull and bear
Dividend Stocks

2 Cyclical Stocks to Buy Before the Next Bull Market

The TSX index has been cyclical in the past 12 months, with neither a bearish nor a bullish trend fully…

Read more »