Tax-Free Savings Account (TFSA) investors have a lot of interesting options to choose from as the TSX Index holds steady, at least compared to the tech- and growth-heavy Nasdaq 100 exchange south of the border. As the Nasdaq 100 nears correction territory (that’s a 10% fall from the top) once again, the TSX Index is hanging in just fine, down just over 1.5% from its recent late-August all-time high. Indeed, whenever the tech sector takes on big-time damage, the TSX Index tends to be less rattled.
Moving ahead, volatility could continue to be extreme, but the TSX Index could go its own way, perhaps moving higher as growth-minded TFSA investors begin to diversify away from tech and artificial intelligence (AI) towards traditional value options. In Canada, there are a ton of great value plays, many of which can fare well as the stock market embarks on what could be an extremely rocky road heading into election season.
Of course, Canada could be hit with an election of its own sooner rather than later following NDP leader Jagmeet Singh’s decision to “rip up” its agreement with the Trudeau Liberals. Either way, the TSX Index just seems like a nice place to hide from rampant volatility, whether you’re a Canadian investor or an American looking for better deals north of the border for a change.
In this piece, we’ll concentrate on cheap dividend stocks that the rest of Bay Street may have been sleeping on.
Canadian Tire
Canadian Tire (TSX: CTC.A) is a solid Canadian discretionary retailer that sells a wide range of goods, from patio furniture to sporting goods, work wear, and even pet food and party supplies. Indeed, the great retailer really is a one-stop shop for many Canadians who live close to a brick-and-mortar location. Though Canadian Tire’s digital presence (and loyalty program) have improved markedly in recent years, the retailer’s strength continues to lie in its dominant physical presence.
Recently, the company reported some pretty solid quarterly earnings that sent shares moving above the $155-per-share mark. Despite ongoing macro headwinds, Canadian Tire reported good revenues and margins. Though same-store sales left a lot to be desired, I think the firm is starting to see its past efforts (think the Triangle loyalty program) pay off.
Additionally, as the firm continues bringing new brand names under its umbrella, I think it’s just a matter of time before the iconic retailer gets back on a bullish run. The company is incredibly well-managed. It just needs the macro picture to get prettier. Perhaps a few more rate cuts could get the job done as more Canadians loosen the purse strings a bit more. After a strong quarterly showing, CTC.A shares look like a bargain at 11.3 times forward price to earnings (P/E), with the 4.5% dividend yield.
MTY Food Group
MTY Food Group (TSX: MTY) stock recently hit new 52-week lows of around $41 and change, following some underwhelming results.
Indeed, the firm behind cherished food court restaurant brands is struggling a bit, with writedowns weighing heavily on the second quarter. Though changing macro tides could be enough to propel MTY, I think the firm’s strong brands (think Thai Express, Koya Japan, Taco Time, and Yogen FrĂŒz) will prevail.
Even if mall-goers are just window shopping, they’ll probably grab a cheap bite to eat at the food court. And, odds are, they’ll eat at one of the MTY-owned locations. Further, MTY stock is extremely cheap right now. The $1.1 billion company trades at 10.3 times trailing P/E with a 2.65% dividend yield. If you like deep value, I think it’s time to buy the dip for one’s TFSA.
