There are plenty of intriguing bargains for Tax-Free Savings Account (TFSA) investors seeking a solid passive-income stream to help them deal with the ever-increasing price of living. You don’t just need to be a retiree to construct yourself a bountiful income stream. Though most younger investors tend to focus on growth and capital gains potential, it may also be a good idea to supplement your income with some higher yielders, especially if some of the names are trading at a discount historically.
With growth stocks enjoying decent gains in recent months, I’d argue that now is as good a time as any to give some attention to the dividend plays. Whether you choose to reinvest the dividends or spend it, the following names seem to offer a great value for money.
Of course, the following names may not be in a spot to enjoy the greatest gains for the second half. However, if you’re worried about swelling valuations (especially in the tech scene), dividend plays may be the perfect way to dampen a market-wide gut punch that a recession could bring.
Without further ado, consider the following three dividend stocks if you’re looking to take on more of an income and value approach as the high-momentum tech trade gets a bit longer in the tooth.
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Bank of Montreal
Bank of Montreal (TSX: BMO) is a Canadian bank that’s been up against it in recent months. The bank conducts quite a bit of business in the U.S. market. After having completed its acquisition of Bank of the West, BMO’s regional U.S. banking exposure has risen at a very inopportune time. The failure of a few big U.S. regionals (think Silicon Valley Bank) worked its way into BMO stock.
At writing, BMO stock is down more than 22% and is just 5% above 52-week lows, which I think are unlikely to be tested again, even if Canada sinks into a recession at some point over the next 18 months. At the end of the day, BMO, and many other big banks, got caught up in turbulence. In due time, the turbulence will pass, and the opportunity to snag a dividend yield of around 5% will pass.
Leon’s Furniture
Leon’s Furniture (TSX: LNF) is another compelling value play that goes for just 8.6 times trailing price-to-earnings alongside a 3% dividend yield. Though the furniture giant has rallied over 38% from its 52-week lows, I still think there’s room to run, as the coming recession may not be as bad as many feared.
Furniture is a discretionary good prone to booms in good times and busts in bad times. Though a recession paints the picture of waning demand, I’d not be shocked if the post-recession recovery kicks in far quicker than analysts expect. The fact remains that it is hard to time the boom-and-bust cycles that a discretionary tends to follow.
By waiting for a recession to end, the greatest recovery gains may be left on the table. If you’re in it for the next four years, why not nibble on shares of the $1.45 billion furnishings kingpin while they’re still down more than 15% from their highs?
