Cheap or undervalued dividend stocks can help you create a passive-income stream and allow you to benefit from long-term capital gains. Generally, cheap dividend stocks trade at a lower multiple compared to their intrinsic value and offer shareholders a generous yield.
Here are two such cheap TSX dividend stocks you can buy to boost your passive income in 2024 and beyond.
Newmont stock
A gold mining company, Newmont (TSX: NGT) is valued at a market cap of $63.5 billion. Rising gold prices in recent days have driven shares of Newmont higher by 12% in the last month. However, the mining giant still trades 48% below all-time highs, allowing you to buy the dip and enjoy a forward dividend yield of almost 4%.
Newmont operates 10 tier-one assets in stable mining jurisdictions across the Americas and Australia. Roughly two-thirds of its gold production is from tier-one assets, generally defined as mines with annual gold production of over 500,000 ounces.
Newmont ended the third quarter (Q3) of 2023 with US$3.2 billion in cash and US$6.2 billion in total liquidity providing it with enough flexibility to target organic growth projects as well as accretive acquisitions. Its net-debt-to-adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) ratio stands at 0.7, which is quite sustainable.
Newmont pays shareholders a base dividend of US$1 per share at a gold reserve price of US$1,400/ounce. It also has a variable dividend company tied to incremental cash flows. In the last four years, Newmont has paid over US$5 billion to shareholders in dividends, increasing payouts by 23.6% annually since 2018.
Newmont reported revenue of US$2.5 billion in Q3 of 2023, with an operating cash flow of US$1 billion and free cash flow of US$397 million. It meant the company invested over US$600 million in capital expenditures, which should drive future cash flows and dividends higher.
Priced at 14.4 times forward earnings, Newmont stock is very cheap, given that adjusted earnings are forecast to rise by 30% in 2024.
Brookfield Renewable Partners stock
A clean energy giant that offers you a tasty dividend yield of 5%, Brookfield Renewable Partners (TSX: BEP.UN) should be on your shopping list right now. Capital-intensive companies, part of sectors such as renewables, real estate, and utilities, have trailed the broader markets significantly since 2021 due to rising interest rates and high inflation.
Down Brookfield Renewable stock is down 41% from all-time highs but has still returned 350% to shareholders in the last decade after adjusting for dividends. Moreover, its predictable cash flows have enabled Brookfield to raise dividends by at least 5% annually since 2011.
The majority of the power it generates is sold under long-term PPAs, or power purchase agreements. Further, these PPAs are linked to inflation, shielding the clean energy heavyweight from macro headwinds in the last two years.
Brookfield Renewable continues to invest heavily in capital expenditures and acquisitions, widening its base of cash-generating energy assets. It also expects to increase funds from operations by 10% annually through 2028 and forecast annual dividend raises between 5% and 9% each year.
BEP is a cheap dividend stock with massive upside potential, given the worldwide shift towards clean energy solutions in the next two decades.
