The Smartest Dividend Stocks to Buy With $400 Right Now

A $400 investment can go a long way and generate substantial earnings from two smart dividend stocks.

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Discerning investors turned to dividend investing in September 2021, when inflation hit 4.4%, the highest level since November 2002. The meteoric rise continued, and the rate nearly doubled to 8.1% in June 2022. It took the Bank of Canada 10 rate hikes to bring it down to 3.3% in July 2023.

The benchmark policy rate is 5% today, although the door to further increases remains open. Governor Tiff Macklem said more finetuning might be necessary to hit the Bank of Canada’s 2% target. Meanwhile, you can beat inflation even with limited capital.  

A $400 investment is enough to produce passive income every quarter. Rogers Sugar (TSX:RSI) and Trican Well Service (TSX:TCW) are now the smartest dividend stocks. The stock prices are less than $6, so you can buy more than 70 consumer staples or energy stock shares.

Consistent, profitable growth

Don’t expect much price appreciation from Rogers Sugar, but you can be sure with the rock-steady dividends. The $592.74 million company operates cane sugar refineries and produces sugar and maple syrup products.

At $5.61 per share, the consumer staples stock pays a hefty 6.35% dividend. Thus, your $400 can purchase nearly 71 shares and generate $26.01 in the first year. If you keep reinvesting the dividends, the capital will compound to $514.64 in four years. The example shows the power of compounding returns.

Management announced recently plans to increase production capacity by 20% or 100,000 tonnes a year. Rogers Sugar will spend $200 million to expand capacity (refining, logistics, and storage), purchase new sugar refining equipment, and construct a bulk rail loading section in Montreal. It should be in service in two years.

Rogers Sugar’s chief executive officer Mike Walton said increasing production to serve rising demand benefits customers, shareholders, and communities. He added, “Our sugar volumes are steadily increasing, and these investments will enable us to serve future demand growth, support the domestic food-processing industry, and improve efficiency within our operations.”

In the third quarter (Q3) of 2023, revenues increased 3% to $262.3 million versus Q3 2022, while net earnings soared 351.8% year over year to $14.18 million. Walton said, “Our business continues to deliver consistent, profitable growth, supported by the strength of the domestic Canadian sugar market, generating improved adjusted EBITDA for the third quarter.”

Earn two ways

Trican Well pays a smaller dividend but has delivered market-beating returns thus far in 2023. At $5.22 per share, current investors enjoy a 46.21% year-to-date gain on top of the 2.35% dividend yield. Also, the total return in three years is 415.5%. You can earn two ways from this energy stock: capital gains and dividends.

The $1.1 billion pressure pumping service company caters to oil & gas industry players. It supplies well-servicing equipment and solutions and provides state-of-the-art equipment, engineering support, reservoir expertise, and laboratory services.

Trican is highly profitable and expects global oil and natural gas demand to remain strong. In the first half of 2022, revenue and free cash flow (FCF) rose 25.2% and 104.9% year over year to $465.3 million and $92.2 million. The profit for the period reached $55.9 million, or 277.7% higher than a year ago.

Different attributes

Dividend earners will always be in a sweet spot with Rogers Sugar. However, Trican Well is a dividend and growth stock rolled into one. The choice is yours.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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