TFSA Investors: 2 Cheap Dividend Stocks to Buy Right Now

Empire Company Ltd. (TSX:EMP.A) and BCE Inc. (TSX:BCE)(NYSE:BCE) both sent off buy signals in recent weeks.

| More on:

The annual contribution limit for the Tax-Free Savings Account (TFSA) increased by $6,000 in 2020. For investors who have been eligible to contribute since its inception in 2009, this pushes up the cumulative contribution room to $69,500.

That is a lot of room to work with, especially for investors who are looking for diversification in their portfolios. This allows us to target growth-oriented and income-oriented stocks in the New Year.

For investors who are holding a lot of cash in this market, there are few discounts to be had to start 2020. The TSX surged to record highs to close out 2019, which mirrored the terrific performance of United States-based indices.

Fortunately, there are still some cheaper stocks available in the first half of January. Let’s dive in and see what stocks we can add at a discount today.

Empire Company

Empire Company (TSX:EMP.A) is a Canadian conglomerate engaged mostly in food retail. It owns and operates large grocery retail chains like Sobeys, IGA, Farm Boy, FreshCo, and others. Its stock has dropped 16% over the past three months as of close on January 8.

The company released its second-quarter fiscal 2020 results on December 12. It reported same-store sales growth of 2% and earnings per share of $0.57, up from the $0.38 posted in Q2 FY2019.

Empire intends to invest $600 million in 2020 across its operations, which $70 million being spent on its expansion of Farm Boy. Empire warned of softening sales and “concerning” conditions in the broader economy, which spurred the sell-off.

Shares of Empire had a price-to-earnings ratio of 17 and a price-to-book value of 2.2 at the time of this writing. The stock last had an RSI of 32, putting it just outside of technically oversold territory. Investors should monitor broader economic conditions, but I like Empire at its current price.

BCE

BCE (TSX:BCE)(NYSE:BCE) is one of the largest telecommunications companies in Canada. Shares have dropped 4.8% over the past three months. BCE initially rose after the release of its Q3 2019 results.

It missed analyst estimates and reported adjusted earnings per share of $0.91. Rogers was hit hardest when it reported that new pricing would have a negative impact on its business.

The telecom is still in a strong position and investors should expect BCE and its peers to adjust to the new environment. Shares had a P/E ratio of 18 as of close on January 8, and a high P/B value of 3.2.

The stock had an RSI of 37 at the time of this writing, as it has climbed just outside of technically oversold territory from its late December lows. However, it is not too late to buy the dip.

BCE stock offers a quarterly dividend of $0.7925 per share, which represents a 5.2% yield. It has delivered dividend growth for 10 consecutive years.

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

ETF stands for Exchange Traded Fund
Dividend Stocks

4 Passive Income ETFs to Buy and Hold Forever

These 4 funds are ideal for long-term investors seeking to simplify the process of investing in high-quality, dividend-paying companies while…

Read more »

sale discount best price
Dividend Stocks

2 Delectable Dividend Stocks Down up to 17% to Buy Immediately

These two dividend stocks may be down, but each are making some strong changes for today's investor.

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

2 Top Canadian Dividend Stocks to Buy on a Pullback

These stocks deserve to be on your radar today.

Read more »

ways to boost income
Dividend Stocks

This 10.18% Dividend Stock Is My Pick for Immediate Income

This dividend stock offers an impressive dividend yield, but is that enough for investors to consider long term?

Read more »

Confused person shrugging
Dividend Stocks

Telus: Buy, Sell, or Hold in 2025?

Telus is down 20% in the past year. Is the stock now undervalued?

Read more »

Dividend Stocks

The CRA Is Watching: The Least-Known TFSA Red Flags

If you want to keep your TFSA growing, don't get the CRA on your back. Avoid these pitfalls, and invest…

Read more »

An investor uses a tablet
Dividend Stocks

BCE Stock: A Lukewarm Outlook for 2025

BCE Inc (TSX:BCE) stock has a tepid outlook for 2025.

Read more »

hand stacking money coins
Dividend Stocks

Invest $25,000 in 2 TSX Stocks, Create $1,363.84 in Passive Income

If you're looking for passive income, these two offer that and more while creating even more from returns.

Read more »