There are plenty of smart dividend stocks that may be worth a second look as we head into the month of February. Undoubtedly, January was a pretty good month, despite the volatile start and finish! As investors begin to re-adjust their expectations regarding interest rate cuts, valuations in their favourite stocks could begin to retreat, perhaps rapidly, if February sees more of a cool-off in some of the highest flyers.
In this piece, we’ll look at dividend stocks that stand out as intriguing buys, even if you’re not enticed with the rest of the market. Indeed, the stage may be set for a wider ride as we head into the late winter.
In any case, if you’ve got $400 sitting around, perhaps in a TFSA (Tax-Free Savings Account) or RRSP (Registered Retirement Savings Plan), it may be worth putting it to work in a low-cost play.
Of course, it may make less sense to put such a relatively small sum to work if you’re going to get dinged $9.99 to make a trade. However, if your broker allows for free (or cheaper) trades, it makes sense to consider the following plays as potential portfolio mainstays.
Without further ado, let’s look at two smart dividend plays that new investors may wish to dip a toe into with a small sum in the present, with perhaps a larger addition at some point in the future.
Bank of Nova Scotia
The secret is out: I’m a huge fan of the Canadian bank stocks right now, even as they run the risk of skating offside in 2024, with Canada’s economic headwinds and the potential for some hairline fractures to appear in the domestic housing market.
Will it be smoother sailing in 2024 for the big banks?
Probably not. However, it’s hard to find anyone who’s remotely bullish on the Canadian banks. And that makes me quite bullish on them. They’re not just great contrarian plays right here. They also sport bountiful dividend yields.
Bank of Nova Scotia (TSX:BNS) stock has a pretty mighty yield of 6.74% after being bruised further over the past year. Undoubtedly, the international segment seems riskier as macro headwinds work their way across the global banking scene. Either way, I view the discount on shares as tough to pass up.
The stock goes for just shy of 11 times trailing price to earnings. For a bank with a robust domestic and Latin American business, I find the multiple to be quite fair, even considering the tough terrain that could lie ahead. Add the dividend into the equation and BNS stock begins to appear like one of the most tempting of the Canadian banks for February.
BCE
If you like yield, it’s hard to take a rain check on telecom titan BCE (TSX:BCE), even if you’re no fan of the Bell Media division. At less than $55 per share, the stock yields more than 7%. And though 2024 could prove another turbulent year, my take is that shares will likely be right back to new all-time highs within the next three to four years. That’s a long time to wait.
However, it’s not so long if you’re getting paid such a fat dividend. It’s a secure payout that may stand to grow further from here as BCE does its best to move on from one of its worst selloffs in a while. Perhaps lower rates could be the catalyst that helps BCE stock surge higher again.
