3 Oversold Dividend Stocks to Buy in August

If a recession hits before the next decade, stocks like Cineplex Inc. (TSX:CGX) are a good defensive option.

| More on:

Editor’s Note: The following has been added to the Corus Entertainment section (as of 8/15/2018), “This won’t last long, though, as Corus has revised its dividend policy. As of September 1, 2018, it will pay a reduced dividend at $0.06 per month.”

Back in May, Macquarie Capital Markets warned that the Canadian housing market had the potential to plunge the country into a recession. The company highlighted the economic ties to construction, finance, insurance, and real estate that came under the housing umbrella. Others have warned that a recession could come from other danger areas.

Scotiabank Economics released a report last month that warned auto tariffs threatened by U.S. president Donald Trump could also trigger a downturn. The tariffs and retaliatory measures that would follow could potentially drag Canada into a recession by the second half of 2019 or early 2020, according to the report.

For investors who are of the mind to prepare for the worst, or at least brace for slower growth in the coming years, here are three dividend stocks to consider adding in August. All three are in industries that can be considered “recession-proof,” or more robust in periods of an economic slowdown.

Cineplex (TSX:CGX)

Cineplex stock had plunged 22.8% in 2018 as of close on August 1. The stock has struggled as attendance has steadily dropped at its venues over the past several years. The traditional cinema industry is facing a serious challenge from the rise of streaming services that are encouraging consumers, particularly in younger demographics, to stay at home.

Although these numbers have been disappointing, Cineplex has moved to diversify its business through the launch of its entertainment complexes known as The Rec Room. These are expected to provide additional income going forward. The movie business has long been touted as recession-proof. In some respects, this is an overstatement, as recent history has shown that the movie business was also harmed by the financial crisis.

As of August 1, Cineplex boasts a quarterly dividend of $0.145 per share, which represents a 5.9% dividend yield.

Andrew Peller (TSX:ADW.A)

Andrew Peller stock was down 8.3% over a three-month period as of close on August 1. Shares were still up over 5% for 2018 and climbed nearly 50% year over year. The alcohol beverage industry has also proven to be robust during periods of economic slowdown. The wine industry has performed especially well in the aftermath of the financial crisis, and wine has overtaken beer as the preferred beverage among younger demographics.

Andrew Peller stock offers a quarterly dividend of $0.0513 per share, representing a modest 0.3% dividend yield.

Corus Entertainment (TSX:CJR.B)

Corus Entertainment is a Toronto-based media and content company. In early July, I’d discussed why Corus is a conundrum for income investors. The stock boasts an absolutely monster monthly dividend of $0.095 per share, which currently represents a 25% dividend yield. This won’t last long, though, as Corus has revised its dividend policy. As of September 1, 2018, it will pay a reduced dividend at $0.06 per month. On top of this, the company has suffered from declining revenues, and traditional television is also under pressure due to the rise of streaming and online alternatives.

Corus stock had plunged over 60% as of close on August 1. Its huge dividend may be too enticing to pass up for investors on the hunt for income.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »