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It’s certainly not as easy to find cheap dividend stocks today as it was a year ago. Canadian investors have to be willing to pull up their sleeves and dig around to find the diamonds in the rough. The good thing is, once you have done the work and found great quality companies, there is not much more you need to do. You just put out the pot and let the income drip in every month or quarter. Just to give you a head start, here are three undervalued stocks that are trading below $30 per share right now!
A cheap e-commerce dividend stock
The year 2020 was a rough one for real estate stocks, but not for WPT Industrial REIT (TSX:WIR-U). In fact, if anything, the pandemic was a net positive for this dividend stock. It owns and operates large-scale logistics and distribution properties across the U.S. Yes, that’s right, it’s Canadian-listed but operates 100% in America. Frankly, that’s why I love this stock.
There is no other nation on earth where e-commerce is more prevalent. To meet e-commerce demand, suppliers need almost twice as much space as traditional businesses. As a result, WPT has had very high occupancy (97.5%), 99% rent collections, and strong rental rate growth.
The company has a large development pipeline that should complement its organic growth in 2021. Today, this dividend stock trades for $19.50 per share and yields just under 5%! Most American peers have a significantly higher valuation and have half the yield. It is a great way to play e-commerce and lock in a nice stable dividend.
A cheap Canadian utility stock
For a boring utility, Algonquin Power (TSX:AQN)(NYSE:AQN) is actually a pretty exciting stock. Not to mention, it is 10% cheaper than it was just a few months ago. Algonquin operates two segments: a diversified utility business and a renewable power business. It operates largely in the U.S., but also has operations in the Caribbean, Canada, and South America.
I like this Canadian dividend stock for a few reasons. First, it is set to be a major beneficiary from the Biden administration’s green infrastructure plan. It operates American subsidiaries, so it is equipped to fully benefit from broader utility infrastructure spend.
Second, the company is already completing a very aggressive capital growth plan. The plan should accrete very strong 8-10% compounded earnings growth every year to 2025. The stock trades under $21 per share and pays a 3.75% dividend. For stable, foreseeable cash flow and dividend growth for years, this is a great one to hold.
A leading telecom dividend stock
After a recent share offering, Telus (TSX:T)(NYSE:TU) is trading relatively cheaply at $25.50 per share. While I am never a fan of stocks issuing equity, the financing does enable Telus to vastly accelerate its fibre optic broadband rollout in 2021. Frankly, once this project is complete, Telus will have an industry-leading network that will prove an advantage as it deploys 5G more broadly.
Beyond its industry-leading network, Telus has been building its overall business to be a digital leader of the future. Rather than acquire very competitive media and sports businesses, Telus has invested in digital verticals that differentiate it from competitors.
It just IPO’d Telus International (a fast-growing digital customer experience business), but it also has growing businesses in virtual health, agriculture, security, and the internet of things. This Canadian stock yields just under 5%, but Telus hopes to raise that by 7-10% all the way to 2022. All-in, a great dividend stock to buy and hold for the long-term.
