As valuations across the board creep higher with every up for markets, new investors may wish to gravitate towards some of the less-loved names that haven’t really participated in the recent run-up.
Currently, there are a lot of attractive dividend stocks with yields slightly higher than the historical range. Indeed, industry-specific woes and more competition with risk-free, high-yield assets like bonds, high-interest savings accounts, and GICs (Guaranteed Investment Certificates) may be part of the reason behind some of the fatter yields we’ve witnessed across certain corners of the TSX Index.
Indeed, investors are right to be skeptical when it comes to higher yields. Nobody wants to be caught hanging onto shares after a dividend reduction announcement.
Indeed, I’ve previously noted that such a dividend cut can act as a one-two punch right in the wallets of investors. Not only are dividend payments slashed, but such negative news tends to accompany a pullback in a stock. Who wants to hang onto the stock of a firm that broke a dividend “promise” to investors?
Certainly not income-oriented investors who got into a name primarily for dividend payments.
In this piece, we’ll look at three dividend stocks that I believe are worth buying going into August 2023.
BCE
First, we have telecom titan BCE (TSX:BCE), which is in the middle of an ugly bear market. The stock is one bad down day away from hitting 52-week lows in the low $57 level. Amid the slump, the stock’s dividend yield has swelled to around 6.7%. That’s a big deal, especially for such a blue-chip gem with such a long history of dividend payments through thick and thin.
Though nobody knows when the tides will turn, buying at these depths could prove wise, as I see some technical support in the $56-57 range. Even if shares slip below the level, I’d be more than happy to buy more shares should the yield test 7%. BCE is no slouch. It has its fair share of issues, but the dividend looks incredibly safe.
TC Energy
TC Energy (TSX:TRP) is another dividend stock that recently slipped to 52-week lows. Actually, TC is at multi-year lows, with shares now below $49 per share. The pipeline giant’s dividend yield is now at a whopping 7.31% (and counting).
The company recently announced it’s selling 40% of its stake in the Columbia gas and gulf transmission systems to a firm based in New York. The deal will reportedly fetch the firm more than $5 billion. The divestitures may be a concern for some investors, but I think the firm can meet its strategic shift without compromising on the dividend front.
Scotiabank
Scotiabank (TSX:BNS) is another well-known dividend giant that’s fallen on hard times. The stock is fresh off a 52-week low and is looking to regain much of the ground lost over the past year. Shares yield an impressive 6.5%, which is high among the Big Six banking giants.
The bank’s emerging markets exposure could be a sore spot if the world economy tilts into a recession. Regardless, I’m a fan of the value to be had, while shares trade at 9.7 times trailing price to earnings and the long-term growth profile. Latin American banking is a place that could give growth investors a nice jolt once the downturn is over.
