The Smartest Dividend Stocks to Buy With $7,000 Right Now

With rates coming down, now seems like a decent time to think about picking up some quality dividend stocks.

With rates coming down, now seems like a decent time to think about picking up some quality dividend stocks. Indeed, the Bank of Canada could continue to be incredibly dovish over the coming months and quarters.

While a few rate cuts here and there are enough to lift the broader basket of higher-yielding securities, I’d argue that there’s still room for Canada’s central bank to surprise with increasingly dovish commentary. Of course, 50-basis-point rate cuts seem excessive, even unrealistic, until Canada’s economy shows more signs of fragility.

In any case, rate cuts are a fantastic tool to help dampen the blow of a potential economic recession. Though dividend stocks probably won’t be spared from the next economic downturn, some of the best-in-breed plays can continue paying quarterly (and sometimes monthly) dividends, even as their share prices look to go sideways or lower.

In this piece, we’ll check in on two cheap dividend stocks that could make sense to pick up if you’ve yet to put your latest $7,000 (the TFSA contribution limit for 2024) sum to work. Sure, you could wait for a pullback to bring forth better deals. At the same time, there’s no guarantee that today’s reasonably priced stocks will stay at today’s relatively depressed levels.

Brookfield Asset Management

Brookfield Asset Management (TSX: BAM) stock is one of the more bountiful ways to play the legendary asset manager. With a 3.4% dividend yield, shares of BAM, which formed from the late 2022 spin-off, Brookfield Asset Management is exactly what income-loving investors have been calling for.

Undoubtedly, the firm is an asset management pure-play that can and likely will grow its dividend at a decent pace over time. With shares at fresh all-time highs of around $61 per share, BAM stock also has quite a bit of upside momentum behind it.

Even if a mild recession and bear market end up landing at some point next year, BAM stock may prove more resilient than peers, especially while it’s going for a rather modest 24.3 times forward price-to-earnings (P/E) multiple, which is a pretty good deal considering the multiples of various other asset management pure-plays out there. Additionally, the yield is a tad more generous than comparable firms trading on the U.S. exchanges.

Killam Apartment REIT

The real estate investment trust (REIT) rally has been pretty ferocious in recent months, with many beaten-down names beginning to make up for lost time in the hope of lower rates. Indeed, rate cuts are in the books, but there are a lot more likely on the way. And each one that’s dealt, the REITs, I believe, stand to get a nice shot in the arm. Killam Apartment REIT (TSX: KMP.UN) stands out as an overlooked residential REIT with a nice growth edge. Undoubtedly, high rates tend to hurt most for growth-focused REITs with lots of capital expenditures.

With rates now reversing course, it should be no shock to see KMP.UN shares leading the charge of late. Over the past three months, shares have soared more than 26%. Now down close to 5% from all-time highs, it seems like Killam is ready to pick up where it left off before rate cuts weighed it down back in 2022.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Killam Apartment REIT. The Motley Fool recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.

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