Investing in dividend stocks offers a strategic cushion against market volatility, making it a favoured approach for long-term investors. When you invest in companies that provide decent dividend yields, you essentially get paid while you wait. This passive income stream can be a powerful ally during times of turbulent markets, allowing you to weather downturns with greater confidence.
Doubling up on an investment can significantly amplify both potential gains and risks. For example, if you’re bullish on ABC stock and purchase 1,000 shares at $10, you might consider buying another 1,000 shares if the price dips to $7. This strategy becomes particularly appealing in stocks that offer safe dividends.
When a dividend stock you already own declines but remains fundamentally sound, purchasing additional shares at a lower price can increase your yield. If the company maintains its dividends, you enhance your income potential while positioning yourself for future gains. Here are two dividend stocks that are worth considering for a strategic “double down” right now.
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Northland Power
Northland Power (TSX:NPI) is a possible choice for investors seeking nice income and growth potential. With over 36 years of operational experience, Northland has built a global portfolio in clean energy production, focusing on renewable sources such as wind (both onshore and offshore) and solar, alongside natural gas. The company boasts a robust portfolio with 3.2 GW of gross generating capacity and more than 90% of its revenue contracted.
Despite facing challenges, with the stock falling over a third since the beginning of 2023 due to rising interest rates, Northland’s future looks promising. Currently, the company has significant projects totaling 2.4 GW under construction, with cash flow expected to commence between mid-2025 and 2027.
Northland retains a 1.1 GW stake in these projects, sharing both the risks and rewards with its business partners. Analysts believe the stock is undervalued, predicting a potential upside of nearly 27% over the next 12 months. With a recent share price of $22.35 and generous yield of around 5.4% paid out as monthly dividends, it’s an interesting option for investors looking to double down.
TD Bank
While Toronto-Dominion Bank (TSX:TD) has faced challenges recently, being the worst-performing among the Big Six banks over the last year and three years due to a money laundering case, the long-term fundamentals remain strong. The stock has traded relatively flat, down approximately 11% over the past three years, yet it continues to reward shareholders with consistent dividend increases.
This recent weakness presents a prime opportunity for long-term investors. With TD stock currently priced at $79.16 at writing, investors can benefit from an above-average dividend yield of nearly 5.2%. Moreover, TD could potentially deliver total returns of 12–14% annually over the next three to five years, driven by its solid fundamentals and potential market recovery. Doubling up on TD now could set investors up for attractive income alongside capital appreciation.
The Foolish investor takeaway
Both Northland Power and Toronto-Dominion Bank present interesting cases for investors looking to double down on their dividend stocks. With a combination of solid yields, strong fundamentals, and promising growth prospects, these stocks offer not only a buffer against market volatility but also the potential for significant returns.
