3 Incredibly Cheap Dividend Stocks

These Canadian dividend stocks are still on sale.

| More on:
value for money

Image source: Getty Images

Soaring interest rates have drive up borrowing costs and are stoking fears of deep recession. The resulting market correction in top dividend stocks is giving investors who missed rebound off the 2020 crash another chance to buy great Canadian dividend stocks at discounted prices for their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios.

Suncor

Suncor (TSX:SU) is catching a new tailwind but is still trading well off the 2022 high and continues to lag behind its oil sands peers.

Suncor trades near $46 per share at the time of writing. The stock was around $45 shortly before the pandemic crash sent oil stocks crashing. Suncor’s oil sands peers currently trade at levels that are as much as double their prices in early 2022, so Suncor should have some decent upside potential.

A new chief executive officer took control of Suncor this year and is making changes to improve efficiency and streamline the asset base to focus on the three core businesses that have historically made Suncor a top pick in the energy patch. Suncor has increased its oil sands holdings and monetized its renewable energy and some offshore oil assets. The company decided to keep its retail business of roughly 1,500 Petro-Canada locations and has large refineries that turn crude oil into gasoline, diesel fuel, and jet fuel.

Suncor is trimming its head count as well to get costs more in line with competitors.

It will take some time to turn things around, but investors can collect a decent 4.5% dividend yield right now while they wait for the next leg of the rebound.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) is priced as if the economy is headed for a major recession. This could turn out to be the case if rate hikes by the Bank of Canada and the United States Federal Reserve go too high and rates remain elevated for too long, as the central banks try to get inflation back to their 2% target.

The general sense among economists, however, is that the Canadian and U.S. economies will go through a short and mild recession.

Bank of Nova Scotia reported decent fiscal third-quarter (Q3) 2023 adjusted profits and is sitting on a solid capital cushion to help it ride out difficult times. The bank increased its provision for credit losses compared to the same quarter last year, but the overall loan book looks stable. As long as there isn’t a meltdown in commercial and residential property prices, the bank shouldn’t see significant losses emerge on mortgage defaults.

Bank of Nova Scotia trades for $64 at the time of writing compared to $93 in early 2022. Investors who buy at the current level can get a 6.6% dividend yield.

TC Energy

TC Energy (TSX:TRP) has increased its dividend every year for more than two decades. Management intends to continue to raise the payout by at least 3% per year over the medium term, supported by the $34 billion capital program.

TC Energy recently shored up its balance sheet through the $5.2 billion sale of an interest in some of its U.S. assets. The company also intends to spin off the oil pipeline business and is considering a sale of part of some Canadian assets to boost the capital position.

TC Energy trades near $49 at the time of writing compared to more than $70 at the peak in 2022. Investors can now get a 7.6% yield from TRP stock.

The bottom line on cheap TSX dividend stocks

Suncor, Bank of Nova Scotia and TC Energy pay attractive dividends and offer investors a shot at decent upside on a rebound. Ongoing volatility should be expected, but these stocks already look cheap and deserve to be on your radar.

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.

The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

More on Dividend Stocks

calculate and analyze stock
Dividend Stocks

4 Fabulous Dividend Stocks to Buy in July

Are you looking for long-term income? These four dividend stocks should not only provide you with value in July but…

Read more »

financial freedom sign
Dividend Stocks

5 Steps to Financial Freedom for Canadian Millennials

Follow these steps and nothing can stop Canadian millennials from achieving their early retirement dreams.

Read more »

Investor wonders if it's safe to buy stocks now
Dividend Stocks

We’re Only Getting Older: A Top TSX Stock That Benefits From an Aging Population

For a bet on the aging population, consider this small-cap stock with growth potential.

Read more »

Growing plant shoots on coins
Dividend Stocks

Yield Today, Growth Tomorrow: 3 Stocks to Keep Building Your Wealth

For investors seeking yield today and growth tomorrow, these top Canadian dividend stocks are certainly worth considering right now.

Read more »

Payday ringed on a calendar
Dividend Stocks

This 10.72% Dividend Stock Pays Cash Every Month

This dividend stock remains a consistent, defensive dividend producer that will give up over 10% in income each and every…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA Investors: 2 Standout Domestic Stocks With 7% Yields

These top dividend-growth stocks look oversold.

Read more »

Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Despite their recent declines, the long-term growth outlook of these two top dividend stocks remains strong, which could help their…

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Growth Stocks vs. Value Stocks: Which Should You Choose?

There are growth stocks and value stocks, but there are also growing value stocks that fit into both sides of…

Read more »