RRSP (Registered Retirement Savings Plan) investors should take advantage of the recent wave of market turbulence. Though stocks have gotten quite hot so far this month, there are certain corners of the market that still look ice cold in the grander scheme of things. Indeed, the days of this high-rate world may be numbered as inflation comes down and central banks have a bit more flexibility to consider their options (rate cuts, anyone?) as soon as late 2024.
Once rates begin to descend, the yields on your favourite dividend stocks and REITs (real estate investment trusts) could fall, perhaps quickly, as income investors look to grab the yields while they last. As you may know, yields fall as share prices rise. And though a bull market in REITs and battered dividend plays could take many years to pan out, I think there’s no sense in waiting around if you like the yields and valuations you see today.
In this piece, we’ll check out two oversold dividend plays I think are still worth picking up as they fluctuate in both directions. If you’re an RRSP investor with a long-term horizon, the following plays seem quite timely.
Bank of Montreal
The Canadian bank stocks have been slowly recovering in recent weeks, thanks in part to a resurgence in enthusiasm in November. Just how much longer the bank surge has to go remains to be seen. In any case, shares of Bank of Montreal (TSX: BMO) haven’t really popped to the same extent as some of its peers. Shares may have gained more than 5% from its multi-year lows of around $104 and change. That said, the longer-term trend is still down, and it’s quite possible that BMO stock could revisit new lows or even make lower lows by year’s end, especially if the bank rally runs out of steam.
The near term is unpredictable. What investors should focus on is the value to be had through a long-term viewpoint. At 10.89 times trailing price to earnings (P/E), with a 5.31% dividend yield, the stock looks quite intriguing from a historical perspective.
Yes, tough sledding may be ahead, but if you’re committed to the next 10 years, I’d argue BMO stock looks the least risky it’s been in years, in my opinion. Yes, it seems like only things can go south as hope diminishes. However, that’s exactly when value-focused contrarians should pounce!
Nutrien
Nutrien (TSX: NTR) is in the middle of a nasty descent right now. Not even the November rally has been able to give a lift to the ailing shares. The agricultural commodity kingpin has been weighed down by retreating agricultural commodity prices. However, there’s room for optimism as others throw in the towel on the well-run producer. When it comes to any commodity play, you don’t want to chase when the underlying commodity hits a cyclical high point.
You want to get in when it’s closer to a low point. Though there’s no alarm that goes off when we reach a bottom, I think that shares are priced as though potash prices are destined to be sluggish. With a nice 3.82% dividend yield, NTR stock looks like a bountiful way to wait for potash prices to turn.
