This has been a terrible year for dividend stocks on the TSX. The S&P/TSX Composite High Dividend Index is down 2.4% versus the S&P/TSX Composite Index, which is up 2.5% this year. Many high-paying dividend stocks are down significantly more than the indices.
While that is a problem if you are heavily invested in dividend stocks, it is an opportunity if you are looking for bargain-priced stocks with attractive yields. Here are four insanely cheap dividend stocks to buy on the TSX today.
An energy stock with a huge dividend
Whitecap Resources (TSX: WCP) trades with a 6.8% dividend yield today. It has raised its monthly dividend by 327% since 2021. Its base dividend remains sustainable even if oil were to dip to US$50 per barrel.
While that is a possible risk, it is not likely in the current supply-constrained environment. Certainly, recent geopolitical tensions could restrict further energy supply.
Whitecap is in a strong position. It has $1.3 billion of debt, which equates to a net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio of only 0.6 times.
The company is generating a lot of cash. It plans to return 75% of that cash right back to shareholders. This stock only trades for 5.8 times earnings and 9.3 times free cash flow today.
A telecom stock if you trust management
TELUS (TSX: T) is trading with the highest dividend yield it has had in several years. Even after the stock has recently recovered, it still trades with a 6% dividend yield.
TELUS has recently been facing challenges, as its cost structure was left elevated out of the pandemic. Debt expenses have been increasing as interest rates have rapidly risen.
As of right now, its dividend is not fully funded by internally generated cash flows. However, management has persistently reiterated that its capital expenditure program is expected to decline, and free cash flow should rise significantly.
Dividend investors need to make a bet that management will do what they say. There are risks with elevated interest rates, but if TELUS can control its cost structure, it could be an attractive buy for long-term dividends.
A discount-priced real estate stock
Another cheap dividend stock to check out is BSR REIT (TSX: HOM.UN). This stock is down 16% in 2023. Despite this, the REIT (real estate investment trust) is expected to earn solid mid- to high single-digit funds from operation (FFO) per unit growth in 2023.
BSR has a great portfolio of 31 garden-style apartment complexes in the U.S. Sunbelt. This REIT trades at a 40% discount to its estimated private market value.
It also trades with a 4.8% dividend yield, which is the highest its yield has been in almost three years. Its dividend is well covered, and the company has been buying back a lot of stock. This REIT could be an acquisition target if its stock value doesn’t cover its real market value soon.
An infrastructure stock with a high dividend
Pembina Pipeline (TSX: PPL) is another stock that pays an attractive dividend yield. Right now, it yields over 6%. Pembina operates a large midstream and pipeline business in Western Canada. The company looks well positioned, given that energy prices have been steadily rising and energy activity is increasing in Western Canada.
Pembina has one of the best balance sheets among its peers. This provides it flexibility to maintain and grow its dividend.
This is not an exciting business. However, its dividend is safe, and it has been growing in recent years. Right now, it trades for 15 times earnings, which is below its long-term average of 16 times.
