TFSA (Tax-Free Savings Account) investors seeking to build wealth over the decades should not be rattled by the recent wave of market choppiness. At this juncture, some of the low-cost dividend stocks out there are looking way too attractive to pass up.
Sure, many higher-yielding dividend payers may be less exciting than your average artificial intelligence-driven technology stock. That said, if you’re looking for value and to steer clear of overvalued conditions, keeping it “boring” with your next big stock purchase may prove wise.
In this piece, we’ll look at two compelling Canadian dividend stocks that I think offer next-level value. For TFSA investors with a bit of dry powder sitting on the sidelines, the following picks may be worth buying and holding for the next three to five years.
Though it’s unlikely that you’ll be rewarded with massive capital gains over a short period of time, I still think the risk/reward is tilted in favour of investors. Further, their impressive dividends should be more than enough reason to hang in through the volatility.
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TFSA dividend stock #1: Nutrien
Nutrien (TSX: NTR) stock has fallen back to Earth after peaking briefly back in early 2022. The stock ricocheted from its May 2023 lows of around $76 and is now hovering at around $85, off around 40% from its all-time high. Though there’s always a chance that Nutrien makes new multi-year lows if the slump in agricultural commodities worsens drastically, I think the stock is already so oversold that even a subtle move lower in potash prices may not have a massive negative effect on NTR stock.
For now, analysts seem to be in a rush to downgrade shares as potash prices continue to tumble. It’s tough to catch a falling knife these days, but the dividend yield (3.3% at writing) makes the pursuit worthwhile.
Further, the stock looks cheap at 8.66 times trailing price to earnings (P/E). And if you lack exposure to agricultural commodities, I’d argue NTR stock is a great way to further diversify your portfolio. Who knows? The tables could turn again in 2024, as tech tumbles and commodity plays flex their muscles.
TFSA dividend stock #2: Barrick Gold
Barrick Gold (TSX: ABX) is another battered dividend payer that may be getting too cheap for its own good. The stock’s hovering around multi-year lows, just north of the $20-per-share mark. Though gold prices have been range-bound lately, I think now represents a good time to increase one’s exposure to the scene before the shiny yellow metal has a chance to pick up traction again.
Of course, gold is very hard to predict. It could easily sag before its next leg higher. That said, as an investor, adding a well-run gold miner to your portfolio could prove wise if stocks end up taking a tumble from here.
Though gold plays, Barrick included, won’t strike it rich for your TFSA, I view gold and its miners as an important way to hedge against unforeseen market risks. Personally, I like having around 4% of my portfolio in gold and gold-related assets as a hedge against the market’s really rainy days! These days, such hedges go for a pretty low price of admission!
With a 2.82% dividend yield, Barrick continues to stand out as the best way to play the space.
Bottom line
Nutrien and Barrick Gold are pretty boring and heavily out of favour right now. Still, if you seek great deals for your TFSA, I think each name is worth picking up right here.
