2 Dividend-Growth Stocks I’d Buy if They Fall a Bit

Brookfield Corp. (TSX:BN) and another top TSX dividend stock are worth buying if they fall.

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There’s nothing wrong with placing a few stocks you’re interested in on your watchlist with the hopes that they cool and fall to lower prices. Indeed, today’s stock market isn’t exactly dirt cheap. And while I don’t think we’re in any sort of bubble, I think that long-term investors seeking to do better than the market averages should insist on grabbing a pretty wide margin of safety.

Indeed, wide margins of safety seem fewer and farther between after the red-hot pop in the TSX Index. Don’t look now, but the TSX Index is up more than 17% since its October 2023 lows. With a potential breakout on the horizon, though, it may prove unwise to sell all of your winners at this point in time.

The TSX is getting hot again and stocks, on average, seem pricier than just a few quarters ago. However, that’s not to see there’s a shortage of value stocks out there. If you know where to look, I still think you can unearth some pretty intriguing and overlooked bargains. In the meantime, I’d much rather look to a magnificent Canadian company and just wait for a bit of a pullback before really loading up. Now, you may choose to nibble a bit here with the intention of doubling down on a 10-15% pullback, or you may just stash a name on your radar.

Investing is all about the long game. And while you may miss out on a bit of upside over the next week or month, I’d argue that waiting for a price closer to your estimate of a stock’s intrinsic value would likely improve your risk/reward in the grander scheme of things. So, without further ado, let’s check in with two dividend stocks that I view as pretty fairly valued.

While I’d not be afraid to buy them at today’s prices, I’d much rather pounce if they were to retreat just a little bit, perhaps closer to a technical level of support.

Brookfield Corp.

Brookfield (TSX:BN) is the type of stock you can just stash at the core of your portfolio and forget that you own it. It has a wide moat in the form of a deep and diversified portfolio of “real” income-producing assets. Indeed, alternative assets, like real estate, infrastructure, energy projects, and all the sort are a great way to grow your wealth through the ages.

And with Brookfield stock (BN shares), you’re getting a one-stop-shop kind of play. Though the stock looks quite cheap at $56 and change, I’m not rushing into the play after its recent surge. Should shares retreat close to the $45-48 levels, I’d be far more interested.

The dividend yield of 0.76% doesn’t seem huge. But I think there’s plenty of growth to be had in the coming years.

CP Rail

CP Rail (TSX:CP) is another great, wide-moat firm that’s been hot of late since exploding off the depths of last autumn. Home to the industry’s biggest mega-merger (with Kansas City Southern) in recent memory, CP stock definitely looks to be one of the growthiest plays in the group.

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While CP stock deserves a premium, I can’t say I’m in a rush to pay a multiple north of 28 times trailing price-to-earnings. Should recent momentum reverse course, I’d be more than happy to step in and buy the dip. Until then, though, it may be better to just stash the stock on a watchlist.

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 Brookfield, Brookfield Corporation, and Canadian Pacific Kansas City. The Motley Fool has a disclosure policy.

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