Broader markets are back in recovery mode, with the TSX Index surging out of the gate for November. With the S&P/TSX Composite Index soaring nearly 3% on Thursday’s upbeat session, it certainly feels like Santa Claus has come early this year. In any case, investors shouldn’t get too excited, chasing the names that are up double-digit percentage points over the past two days.
Instead, I think the steady low-cost dividend stocks are ripe for buying. Agricultural commodity producer Nutrien (TSX: NTR) and big-energy firm Suncor Energy (TSX: SU) are two of my favourite Canadian blue-chip dividend studs at this juncture for investors seeking strong dividends at a reasonable price of admission.
Indeed, if the TSX Index ends up leading the way going into the holiday season, the commodity plays may need to pick up traction. And the following two plays, I believe, stand out from the crowd right here.
Image source: Getty Images
Nutrien
Nutrien stock has been in a funk since topping out back in 2022. With shares off around 44% from their peak, I view Nutrien as a compelling contrarian dividend-growth play. Even if agro commodities continue to stay cool, I view the longer-term secular tailwinds as coming into play for investors seeking to hang onto their shares for the next five years (or more). Indeed, the rising global population calls for higher crop yields, which, in turn, translates to more demand for agro commodities like potash, nitrogen, and all the sort.
It’s never easy to catch a falling knife, especially in the commodity scene, given how choppy commodity fluctuations can be. Regardless, the 3.9% dividend yield, I believe, makes Nutrien a compelling value for investors seeking value, passive income, and a source of greater diversification.
All considered, NTR stock looks intriguing at 10.4 times forward price to earnings (P/E). And for the technicians out there, I view a strong level of support in the $73-75 range. At $76 and change, the risk/reward tradeoff looks compelling going into year’s end, especially if Santa Claus is coming to town a tad early in 2023.
Suncor Energy
Suncor Energy is another commodity play that’s been taking a breather lately. On Thursday, shares took off, surging around 3.5% in what was a robust day for broader markets. Indeed, the retreat in rates on the U.S. 10-year Treasury really helped pave the way for such a big up day. For Suncor, which is pretty much flat year to date, I think a potential breakout past the $48-49 ceiling of resistance could be in the cards if oil prices stay elevated.
At 10.14 times trailing P/E, SU stock isn’t all too expensive for a big-energy firm that’s taking steps to improve efficiencies and safety. With a 4.6% dividend yield, income investors may wish to stash the name atop their watchlists ahead of the holiday season. Like Nutrien, Suncor is a great portfolio diversifier if you lack exposure to the Canadian energy patch.
The beta of 1.6 suggests a high degree of correlation to the broader markets. If you can stomach the choppy moves, I think there’s ample value to be had for long-term investors. Between Nutrien and Suncor stock, I’d have to go with the latter. The dividend is richer and newfound momentum could help propel shares toward all-time highs not seen since earlier last year.
