When buying dividend stocks, it’s prudent to wait for a discount to lock in a good yield, but that’s not always feasible. Sometimes, the stock is too attractively valued to ignore, even if there isn’t an ample price discount. Other times, the stock may be going bullish, and your choice is between the current modest or future low yield.
However, you can offset this by doubling up on these dividend stocks when they are adequately discounted, and currently, three dividend stocks fit the bill. Two of them are blue-chip stocks simply weighed down by a weak sector.
Telus (TSX:T) is the second-largest telecom company in Canada (by market cap) and operates primarily in Western Canada. Many of its numbers are not comparable to the other two giants in this consolidated industry, but it stands out for its organic growth and performance. In 2022, it experienced decent growth in virtually all telecom market segments, and it’s also emerging as a regional leader in telehealth.
While the overall growth potential of Telus is top tier in the telecom sector, if you are only concerned with dividends, it usually doesn’t stand out from its peers. However, the yield has increased considerably thanks to a hefty 32% discount it’s currently trading at.
The 6.2% yield for an Aristocrat that has grown its payouts by 33% in the last five years makes it quite appealing as a dividend payer you can buy much more of.
Allied Properties (TSX:AP.UN) is not a blue-chip like Telus, but it’s considered a leader in the Canadian real estate market, especially the office real estate segment. The company holds a compelling portfolio of urban office spaces that has grown at a considerable pace in the last two decades. The $157 million portfolio in 2013 is currently worth about $12.2 billion.
Allied is one of the few real estate investment trusts (REITs) that investors prefer for its growth potential and not just its dividends. However, a massive slump the REIT has yet to recover from has changed that. The financially stable dividends available at an enormous 8.5% yield make it a compelling dividend pick right now.
The REIT has a long history of growing its payouts, and if it can sustain this pattern, its impact on the dividend income potential of your portfolio can be quite significant.
Enbridge (TSX:ENB) is one of the best, most coveted Dividend Aristocrats and energy stocks in Canada. Its status as the largest energy company in Canada and the pipeline-based business model, which makes it less vulnerable to the energy sector and price fluctuations compared to upstream companies, makes it a stable long-term pick. The cherry on top is its stellar dividend-growth history and powerful yield.
The yield has become even more attractive, thanks to the 19% discount the stock is trading at. It has pushed the yield up to 7.4%. Enbridge’s dividend is safe, and the chances of the company growing its dividend for the foreseeable future are quite strong, especially now that it has revised its dividend-growth strategy for long-term sustainability.
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The three discounted dividend stocks are worth adding to your portfolio and worth buying much more of. The current attractive yields can significantly improve the return potential of your overall holding. Also, there is a decent chance that the discount period/slump may be followed by a good recovery, which will also benefit your portfolio from a capital-appreciation perspective.