2 Unreasonably Battered Stocks Just Became Too Cheap to Ignore

The Fiera Capital stock and Pizza Pizza Royalty stock are enticing investment options in the pandemic. Aside from trading at less than $10, the dividend yields are high.

| More on:

The COVID-19 pandemic has mercilessly battered many stocks in 2020. Investors fear the market because of high volatility and uncertainty. However, the downturn opens cheap buying opportunities for bargain hunters and income investors.

It’s hard to ignore stocks like Pizza Pizza Royalty (TSX:PZA) and Fiera Capital (TSX:FSZ). Both trade at less than $10 but offer juicy dividends. You can make a killing from this pair of dividend stocks with minimal investments.

Better performance in the pandemic

Fiera Capital was developing an uptrend at the beginning of the year. The run went on until early March before news of a spreading coronavirus echoed around the world.

From a high of $12.40 on January 24, 2020, the stock slid to $4.78 on March 23, 2020 — a sharp drop of 61.4%. The stock has gone up since and is trading at $9.27 per share as of this writing. The attraction here is the 9.19% dividend yield.

If you have 6,000 to invest, the dividend payout is $551.40. In a Tax-Free Savings Account (TFSA), the amount is tax-free. Your money will compound if you will keep reinvesting the dividends.

Fiera Capital is a $943.88 million independent asset management firm. The company caters to institutional investors, mutual funds, charitable organizations, and private clients. It invests in the public equity and fixed-income markets around the world but more on the Canadian market.

As of March 31, 2020, the assets under management are worth $158.1 billion. For Q1 2020, Fiera Capital reported a $12 million net profit compared to a net loss of $6.6 million. The company is doing better in the health crisis.

Pizza sales are down

Pizza Pizza took a beating this year, as it fell from $9.78 in late January to $5.51 past mid-March. But the restaurant stock was able to pare the 43.7% loss. The current price is $8.83 per share, following a rally in May.

Dividend investors will delight in the 6.93% yield. Assuming Pizza Pizza can sustain the yield, any amount of investment will double in fewer than 10-and-a-half years. A dividend cut, however, is a possibility if cash flows continue to be weak.

The global crisis has had a significant impact on restaurant operations. Pizza Pizza saw system sales in the royalty pool decrease by 6.1%. From $133.9 million in Q1 2019, it went down to $125.8 million in Q1 2020. There are 749 restaurants in the pool.

The Royalty Pool System Sales of Pizza Pizza consists of delivery, pickup, walk-in and non-traditional sales. The business slowdown began in the last two weeks of March. There was a significant decline in walk-in sales at the height of the pandemic. Somehow, delivery and pickup sales partially offset the lost business.

Walk-in sales have modestly improved in May. Pizza Pizza is hoping to see improvement with the easing of social distancing policies and the full reopening of the economy.

Invest with caution

Whether it’s a bull or bear market, there are earning opportunities. Fiera Capital and Pizza Pizza are enticing choices, because both are trading at bargain prices and paying high dividends. Still, you have to approach the market with caution. The pandemic is one of a kind.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of PIZZA PIZZA ROYALTY CORP.

More on Dividend Stocks

analyze data
Dividend Stocks

Here’s Why the Average TFSA for Canadians Aged 41 Isn’t Enough

The average TFSA simply isn't enough for most Canadians in their early 40s. Here's how to catch up.

Read more »

cloud computing
Dividend Stocks

Insurance Showdown: Better Buy, Great-West Life or Manulife Stock?

GWO stock and MFC stock are two of the top names in insurance, but which holds the better outlook?

Read more »

concept of real estate evaluation
Dividend Stocks

How to Earn a TFSA Paycheque Every Month and Pay No Taxes on It

Canadian REITs can turn your TFSA into a monthly paycheque machine for life. Here's how Morguard North American Residential REIT…

Read more »

A plant grows from coins.
Dividend Stocks

The Smartest Dividend-Growth Stocks to Buy With $1,000 Right Now

New dividend-growth investors should consider CN Rail (TSX:CNR) stock and another top play if they're looking to build wealth over…

Read more »

Dividend Stocks

The 3 Top Canadian Stocks to Buy With $1,000 Right Now

If you want consistent income, look to consistent dividend payers. These three stocks are some of the best in the…

Read more »

A worker gives a business presentation.
Dividend Stocks

Want a 6% Average Yield? 3 TSX Stocks to Buy Today

These stocks pay good dividends that should continue to grow.

Read more »

chart reflected in eyeglass lenses
Dividend Stocks

Is Alimentation Couche-Tard Stock a Buy for its 0.9% Dividend Yield?

Couche-Tard stock's small yield is not enticing, but its growth potential could be a wealth creator.

Read more »

Hourglass and stock price chart
Dividend Stocks

5.2% Dividend Yield! I’m Buying This TSX Stock and Holding for Decades!

With its 5.2% dividend yield, Toronto-Dominion Bank (TSX:TD) is a stock I'm eagerly buying.

Read more »