With the TSX Index recently dipping after briefly touching new all-time highs, dividend investors may have an opportunity to snag some bargains. Of course, the latest market reversal may be far from over as investors re-evaluate the slate of risks going into the summer months.
That said, if you’ve been meaning to put a bit of extra cash to work on a dividend payer, the following names, I think, seem unfairly punished and undervalued enough to stash on one’s summer watchlist. As trading volume looks to take a breather (or not if tariff talk continues rattling investors on their summer vacations), perhaps the following dividend deals could be worth pursuing gradually over time.
Of course, timing the market could prove dangerous in 2025 as we discover how damaging tariffs really can be on corporate profits. Additionally, there’s no guarantee that we’ll exit the year with favourable trade deals. Though there’s room for optimism, investors should certainly be prepared for a doozy of a second half. In any case, the following stocks will pay you a solid dividend for your patience and willingness to ride out a storm.
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CN Rail
CN Rail (TSX: CNR) stock is starting to retreat a bit after enjoying an explosive upside May melt-up. Though it’s far too soon to tell if the May gains will be given back, I think that the latest retreat is more than buyable. At the end of the day, the railway stocks are among the most predictable of dividend growers.
With a strong network, a robust balance sheet, and plenty of growth levers that it could consider pulling (could more rail mergers and acquisitions be in the cards?), the stock seems way too cheap at 20.5 times trailing price to earnings (P/E). The dividend yield sits at just under 2.4%.
And while the yield isn’t the largest in the world, it is slated to grow at a very respectable rate, regardless of whether there’s a recession in the forecast. Arguably, a recession may already be partially priced in at $147 and change. In any case, Wednesday’s 1.6% drop seems more like an opportunity than a sign to bail on one of Canada’s best dividend-growth gems. It’s not just dividend growth for investors to look forward to but the resumption of share buybacks. At these depressed levels, I think buybacks will have a very pronounced shareholder value-creating effect.
CT REIT
CT REIT (TSX: CRT.UN) is a real estate investment trust (REIT), and it’s a fantastic way for passive-income investors to get themselves a nice raise while reducing their correlation to the broad markets. At writing, shares of CRT.UN yield 6.14% to go with a 0.83 beta (meaning slightly less correlation compared to the TSX Index).
With shares now up around 10% from their April lows, I think the steady REIT has what it takes to steadily march back to new highs, even if there’s a recession in the cards. At the end of the day, lower rates are on the horizon, and after a cool inflation reading (core inflation was still hotter, though), perhaps much lower rates could be something for REIT investors to look forward to.
In any case, CRT.UN is a REIT worth buying on strength, given its steadiness in hard times and pronounced exposure to one of the more liquid Canadian retail titans out there.
