Tariff turbulence had markets reeling earlier this year, but there’s hope that a deal can be made in time to avoid a potential fall into recession. And while inflation could still run rampant from here, there are a number of dividend stocks out there that can provide investors with a bit of relief as they look to continue raising their payouts at a respectable rate over time, even as the economy and consumers experience a new slate of challenges.
Indeed, wandering into choppy and uncharted waters (think tariffs, rising geopolitical risks, and swelling valuations) can be a daunting task, especially if a portfolio’s heavily weighted towards growth and tech, with little in the way of names that can hold their own once the bear show signs of emerging from its cave.
Without further ado, this piece will look into two incredibly cheap dividend growth stocks that I view as quite timely going into July.
CN Rail
After a rough past few years of trading, shares of CN Rail (TSX:CNR) now boast a dividend yield that makes it a great way to score upfront yield alongside high double-digit percentage dividend growth. Indeed, the iconic railway giant is now in a full-blown bear market, down close to 22% from its all-time highs.
With a swollen 2.5% dividend yield, though, the name looks that much more appealing to yield seekers and dividend growth investors alike. Of course, there’s no telling when industry headwinds will blow over.
CNR stock could stay stuck in a bear market for a while. Either way, tariffs and industry-specific tailwinds won’t last forever. For those looking to invest for the next 10 years out, I’d not sleep on shares while they’re at historic depths.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is a big energy play that has proven to be a great source of passive income (5.1% dividend yield at writing). Over the past five years, shares have gained a whopping 301%. And on the way up, the oil titan has continued to spoil investors with generous dividend hikes.
Though share price momentum has slowed in the past year, I’d not look to take profits in the name, especially as one of the established kings of the Alberta oil sands. Though the 1.5 beta entails a choppier ride, I ultimately think the hefty payout and modest multiple (12.9 times trailing price-to-earnings) make it a name to hold for the long haul, even as turbulence picks up a bit.
Additionally, the name could prove quite resilient through the tariff turmoil with much of the fear likely already priced in at these depressed levels. Perhaps most encouragingly, CNQ’s managers are committed to playing the long game, with breakeven prices reportedly at a ridiculously low US$40 crude price.
Unless oil prices experience some sort of unforeseen catastrophic implosion, CNQ shareholders can expect to receive juicy dividends and a good amount of capital appreciation over time. Indeed, whenever you have a high yield and share gains, you could have the formula for TSX-beating total returns.
