The Smartest Stocks to Buy With $20 Right Now and Hold Forever

Investing in undervalued dividend stocks such as Kinross Gold can help you derive market-beating returns in 2024.

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The stock markets can be quite intimidating for new investors due to the volatility associated with this asset class. However, despite multiple bear markets, the S&P 500 index has returned more than 10% annually in the last six decades, allowing investors to benefit from game-changing wealth.

While the stock markets are close to all-time highs, there are several companies trading below their intrinsic value right now. Investing in quality value stocks should help shareholders outpace the broader markets over time.

Here are two such TSX value stocks you can buy for less than $20 in April 2024.

Kinross Gold stock

Valued at $10.7 billion by market cap, Kinross Gold (TSX:K) is one of the largest gold miners in Canada. A challenging macro environment, geopolitical tensions, and the possibility of interest rate cuts have driven gold prices to all-time highs in 2024. However, mining stocks continue to trade at a depressed multiple despite reporting stellar results in 2023.

For instance, shares of Kinross Gold have declined 13% in the last three years, allowing you to take advantage of the dip. In 2023, Kinross met its production, cost, and capital guidance as it more than doubled free cash flow year over year while maintaining an investment-grade balance sheet.

Kinross Gold reported revenue of $4.3 billion in 2023, up from $3.45 billion in the year-ago period. The 23% increase in the top line was driven by production increases and higher average realized gold prices.

Kinross reported an operating cash flow of $1.67 billion and a free cash flow of $560 million in 2023. The gold miner paid shareholders an annual dividend of $0.16 per share and distributed roughly $230 million to shareholders in the last year, indicating a payout ratio of less than 50%.

Kinross ended 2023 with $352 million in cash and a total liquidity of $1.9 billion, which will be used to reinvest in growth projects and acquisitions.

Wheaton Precious Metals stock

Another undervalued dividend stock you can buy today is Whitecap Resources (TSX:WCP), which offers you a forward yield of 6.4%. Whitecap is an energy company focused on the acquisition, development, and production of oil and gas assets in Western Canada.

Whitecap increased production per share by 11% in 2023, resulting in robust cash flows and a 26% increase in the base dividend.

Whitecap reported a funds flow of $1.8 billion and deployed $954 million in capital expenditures, which suggests free cash flow stood at $838 million, or $1.38 per share. It paid shareholders an annual dividend of $0.62 per share, or $373 million, indicating a payout ratio of less than 45%.

Whitecap’s solid results in 2023 allowed it to maintain a strong balance sheet and end the year with a net debt of less than $1.4 billion or a net debt to earnings before interest, tax, depreciation, and amortization ratio of 0.7 times.

Down 44% from all-time highs, Whitecap stock has returned 18% year to date. The TSX energy stock is priced at 9.5 times forward earnings and trades at a discount of 20% to consensus price target estimates.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Whitecap Resources. The Motley Fool has a disclosure policy.

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