2 Dividend Stocks You Won’t Want to Miss

Scotiabank (TSX:BNS) and another top dividend payer have dividend yields north of the 7% mark going into December 2023.

| More on:
Dollar symbol and Canadian flag on keyboard

Image source: Getty Images

There are many dividend stocks across the board that have dividend yields on the higher end of their historical ranges. A major reason dividend yields are, on average, slightly swollen is due to higher interest rates and concerns about an economic slowdown. Undoubtedly, macro headwinds and recession fears have taken a toll on broader markets in recent years.

With the exception of the so-called Magnificent Seven, stocks haven’t really had as great a year as you’d expect. In many ways, the equal-weighed S&P 500 looks more like the TSX Index, which has been in a funk since mid-2022.

Only time will tell where the top dividend stocks go from here, but if you’re in the belief that rates could be headed lower from here, I think dividend stocks are worth snagging while they’re still out of favour with most other investors.

In this piece, we’ll consider two dividend stocks that are looking cheap and ready for relief going into the new year.

Scotiabank

You could probably do well over the long run by picking up any Big Six Canadian bank stock after yet another year of painful downside moves.

Scotiabank (TSX:BNS) remains one of my favourite deep-value bets of the pack, especially after its brutal Tuesday tumble on the back of some sub-par quarterly earnings. Loan-loss reserves and costs increased, weighing heavily on a quarter that saw profits come in on the lower end.

Undoubtedly, things seem to be going from bad to worse for the $69.4 billion domestic and international banking behemoth. While I have no idea if the latest weak earnings represent the lows, I think the more than 7% dividend yield is worth grabbing. It’s one of the safest yields north of 7%, in my humble opinion. Once rates retreat and the economy warms again, don’t expect Scotiabank’s yield to stay elevated for very long.

Laurentian Bank

Laurentian Bank (TSX:LB) is another troubled bank that’s been sinking lower in recent sessions. On Tuesday, shares slipped 0.6%, bringing it down a grand total of 58% from highs hit in late 2017. Undoubtedly, Laurentian Bank seems to be losing deposits at a concerning rate. Demand deposits fell 3.3% in the first two months of the fourth quarter. Indeed, the Big Six may be getting the better of smaller, more regionally focused banks like Lauranteian.

As management experiences changes, though, I’d look for the bank to make drastic moves to turn the tide. For now, LB stock is a deep value play that’s not for the faint of heart, given its propensity for vicious swings. At writing, the dividend yield is at 7.36% — just a bit higher than that of Scotiabank.

The Foolish bottom line

Between shares of BNS and LB, I’d have to stick with the former. Scotiabank’s international focus won’t be a soft spot for the firm forever. As the economy normalizes, I see a pathway for BNS to recover. As for LB, things are less clear.

If the bank can stop its deposit bleed, I do see substantial upside over the near term. As always, though, such deep-value plays accompany a greater magnitude of risk. Fortunately, I think a great deal of such risk is already baked in.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia and Laurentian Bank Of Canada. The Motley Fool has a disclosure policy.

More on Investing

The sun sets behind a high voltage telecom tower.
Dividend Stocks

Should You Buy Northland Power for its 5% Dividend Yield?

Northland Power stock trades 52% below all-time highs and offers shareholders a tasty dividend yield of 5% right now.

Read more »

TFSA and coins
Dividend Stocks

2 Top Stocks to Add to Your TFSA in February 2024

These two TSX stocks can be excellent holdings for your self-directed TFSA portfolio to inject stability and tax-free wealth growth.

Read more »

edit Back view of hugging couple standing with real estate agent in front of house for sale
Stocks for Beginners

Investors: What to Expect From Canada’s Real Estate Market in 2024

What does 2024 hold for Canada’s real estate market? Let's find out from Nathan Levinson of Royal York Property Management.

Read more »

dividends grow over time
Dividend Stocks

Passive-Income Seekers: Invest $10,000 for $400 or More in Annual Income

Are you interested in generating passive income? Invest $10,000 for a hefty annual income!

Read more »

edit Sale sign, value, discount
Tech Stocks

Got $1,000? 2 Stocks to Buy Now While They’re on Sale

These two top Canadian growth stocks look underpriced right now to buy for the long term.

Read more »

Two seniors float in a pool.
Tech Stocks

Could Nuvei Stock Help You Become a Millionaire?

Nuvei stock is favourably priced today for growth focused investors to buy. Could the stock enhance your chances to build…

Read more »

Canadian Dollars
Dividend Stocks

Want Decades of Passive Income? 3 Stocks to Buy Now

Want passive income that could last a lifetime? These three top Canadian dividend stocks have a good chance of delivering…

Read more »

Two seniors float in a pool.
Dividend Stocks

Retiring on Dividends: How Much Do You Need to Quit Work?

Canadians might need more than $1 million to quit work, but can still live comfortably in retirement with sustained dividend…

Read more »