2 High-Yield Dividend Stocks to Buy on the Rebound

Buy and hold Bank of Montreal (TSX:BMO) and another top dividend stock for the next two years.

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High-yield dividend stocks seem like a great buy right now, while they’re starting to gain ground after the latest round of Bank of Canada rate cuts. Indeed, two rate cuts are officially in the books, but it’s the many more to come that could act as a bit of a driver for some of the beaten-down (or at least partially weighed-down), rate-sensitive stocks that haven’t really gone anywhere fast since rates began to ascend in what was a nasty battle with elevated inflation.

Fortunately, the inflation is mostly over, even though many Canadian shoppers would dispute this, given the still lofty prices at the local grocery or convenience stores. Either way, the pace of price increases should slow, and, in some cases, price reductions and deals may be in the cards over the coming months and quarters.

Rate cuts are coming. That could be massive for cheap dividend stocks with big yields

Of course, many quick-serve restaurants have been quite aggressive when it comes to cutting prices. And though only time will tell where the price of everyday grocery necessities settles, I think that inflation and rates can head lower, perhaps much lower, in the coming quarters.

Of course, a mild recession (or per-capita recession) is always a possibility. And if the Bank of Canada is behind the curve (I don’t think it is, especially compared to the Federal Reserve, which may be a bit late to act), perhaps some 50-basis-point rate cuts are possible rather than the 25-basis-point ones it started off at.

Either way, rates are coming down, the economy may be able to catch a break, and the firms that borrow huge sums to finance capital projects may get a chance to make up for lost time as we head into 2025.

In this piece, we’ll look at two intriguing high-yielders that could rebound over the next two to three years.

Bank of Montreal

Bank of Montreal (TSX:BMO) delivered a pretty awful quarterly earnings result this season. The stock responded by tanking toward its year-to-date lows of around $110 per share, essentially wiping out the gains it enjoyed through mid-August.

Undoubtedly, it’s hard to sugarcoat such bad numbers, which came up well short, especially compared to other Big Six bank peers, some of which delivered solid, better-than-expected numbers. Either way, I believe the higher loan-loss provisions shouldn’t raise alarm bells.

At the end of the day, the Bank of Montreal is a solid bank that can manage through this tough period. With a nice 5.52% dividend yield and a mere 12.9 times trailing price-to-earnings (P/E) multiple, perhaps BMO stock is the best bank for your buck this September.

Though I have no idea when BMO will follow its better-performing banking peers higher, I am a fan of the U.S. business and its ability to bounce back from a nasty but forgivable past quarter.

Created with Highcharts 11.4.3Bank Of Montreal PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Enbridge

Enbridge (TSX:ENB) is a pipeline firm and dividend rockstar with a massive 6.7% dividend yield. After rallying 13% year to date, the yield isn’t nearly as swollen as it once was. Still, I view the dividend as on stable footing, as management looks to continue growing it every year despite any setbacks.

Looking ahead, ENB stock’s momentum could carry into the new year, and though new highs are still well off, I’d not be afraid to collect dividends while waiting for the well-run cash cow to get back up to speed.

At 21.0 times trailing P/E, shares of ENB look like a fine addition to any value-oriented passive-income portfolio for the autumn season.

Created with Highcharts 11.4.3Enbridge PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

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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 positions in Bank Of Montreal. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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