Prudent dividend investing is a simple way to progress with your long-term retirement goals while still getting a bit of passive income to help you meet the rising costs of living today. Indeed, you do not need to be a retiree to appreciate dividend stocks, especially these days!
Though younger investors may wish to continue pursuing higher-growth names to maximize their wealth-creative potential and their ability to take on more risk than their parents, I’d argue that today’s inflationary climate is a perfect time to rotate into higher-yielding dividend plays, especially the ones that have been beaten down in recent quarters.
Image source: Getty Images
Dividend stocks still look more appealing, even in a high-rate world
Indeed, value always matters. And these days, I think there’s immense value to be had in dividend stocks, while most others look to risk-free assets now that rates are quite high. While there’s nothing wrong with Guaranteed Investment Certificates (GICs) and their juicy rates, I believe dividend stocks, especially those of wonderful companies that are going through rough times, are, by far, a better bet.
At these levels, I think you’re far better compensated for the risks in cheap dividend stocks compared to the likes of a GIC. So, if you’re investing for the next five to seven years, I’d bet that dividend stocks are the superior bet over savings or even GICs over the long term.
Now that I’ve convinced you not to give up on dividend stocks, let’s look at two that I’d be tempted to buy right here.
Quebecor
Quebecor (TSX:QBR.B) stock sports a nice 4.12% dividend yield at the time of writing. The Quebec-based telecom may ultimately challenge the Big Three Canadian telecom firms over the next decade, as it looks to offer its services to Canadians outside of Quebec. The stock is down around 19% from its high, thanks in part to the recent rate-driven selloff in telecom stocks.
Though the dividend yield isn’t the highest in the industry, I find QBR.B to be the best balance of long-term growth, upfront yield, and dividend growth. At 10.91 times trailing price to earnings (P/E), Quebecor stock may very well be one of the better dividend bargains in today’s rocky market.
With a $6.7 billion market cap, Quebecor is also a relative lightweight in an industry dominated by fairly sizeable (and, at times, bloated) firms. Given its smaller market cap, I think it has the agility to outpace its peers over the next few years, both in market share and growth.
Mondelez
Mondelez (NASDAQ:MDLZ) is an American confectionary firm that has impressive brands in the chocolate and biscuit scene. Indeed, you’d be hard-pressed to find similar consumer-packaged goods exposure here on the TSX Index.
As such, I think MDLZ stock is worth making the move to the Nasdaq exchange. In addition to the unique defensive exposure, you’ll also get a compelling dividend yield (currently at 2.71%) and a good mix of growth prospects. Further, the stock is also quite cheap after its recent plunge on the back of fears that weight-loss drugs will eat into the market share of junk food makers.
Top brands like Cadbury aren’t about to see their moats fade, just because there’s a new obesity drug on the market. At 21.1 times trailing P/E, shares look dirt cheap for investors seeking defensive growth prospects and a juicy payout.
