3 Rock-Bottom Stocks to Grab With $3,000

Investors looking for the right rock-bottom stock might be looking at the wrong place. You might be looking at company’s trending downwards, or ones that just dropped, or even penny stocks ready to blow (in your opinion). However, these aren’t the stocks I would consider to be rock bottom. Instead, I would look at the valuations from a fundamentals perspective. This way, even if shares are starting to climb, investors could see that there is even more growth to come, leaving today’s share price at rock-bottom levels. So let’s look into why Algonquin Power & Utilities (TSX: AQN), Hydro One (TSX: H), and NorthWest Healthcare Properties REIT (TSX:NWH.UN) belong on that list.

AQN

First up there’s AQN, a power company pivoting towards becoming a regulated utility play. The second quarter showed some promise as well. Though adjusted earnings were down slightly, the company is still going ahead and investing heavily in utility capital expenditure. This is expected to be around $2.5 billion between 2025 and 2027. Of course, this can create high debt, with total debt now at $6.3 billion.

That being said, debt has already come down for AQN. Furthermore, it can now support its 4.8% dividend after slashing it a few years ago. Meanwhile, the valuation looks great trading at 0.9 times book value. All considered, this dividend stock is going back to basics, and earnings are already starting to reflect some positivity. While it could take a while, when this company rebounds, so too should the share price for today’s investor.

H

Then there’s an actual regulated utility. H stock demonstrated why companies like AQN are making the move, recently reporting strong second quarter earnings. Its earnings per share and net income improved year over year, with revenue and operating cash flow large and stable. Even with heavy investments, H remains strong thanks to a regulated income stream.

This helped the company support its ongoing dividend, now yielding around 2.7% as of writing. Given its support from the Ontario government, predictable cash flow, and a clear role in the provincial energy buildout, future growth looks all but certain. Add in a solid dividend track record and low beta, and this is a core investment you can grab hold of right away.

NWH

Now here’s a truly rock-bottom investment, also going through a recovery period. NWH came on strong a few years ago when low interest rates were on deck, and the company was investing heavily in its healthcare properties. It allowed the stock to expand fast and furious, creating a diversified, global healthcare powerhouse. The problem? It expanded too much, too soon, and was forced to sell off properties to help its bottom line.

The good news for today’s investor? There are massive improvements underway, making this dividend stock look incredibly valuable. The second quarter saw occupancy at 97% with an average lease agreement of 13.5 years. Its leveraged improved to 48.5%. Add in that the stock offers a 7% dividend yield at writing and is in a defensive asset class of healthcare properties, and this is a great investment for long-term investors. Especially those that want a substantial dividend while they see the company climb back to the top.

Bottom line

What’s great is that you don’t need a massive investment for any of these stocks. If you already have a core investment, then these are great little add ons. By investing $1,000 in each, here’s what you could earn in dividends each year.

All together, these are three sensible picks if you’re looking at essential investments and long-term holds. But as always, discuss any investment with a financial advisor before making a decision.