3 TSX Stocks That Became Too Cheap to Ignore

The TSX keeps posting new highs, although there are still stocks that are too cheap to ignore. You can form a solid income portfolio with the Bird Construction stock, Stingray stock, and Medical Facilities stock.

| More on:

The S&P/TSX Composite Index posted a new record to start the week of June 14, 2021. Canada’s primary stock market finished at 20,157.70 and could be on track to hit a new milestone this month. Energy stocks continue the march towards a 60% year-to-date gain and outperform the TSX by a mile.

For Canadians looking for great buys, three dividend stocks are too cheap to ignore. You won’t spend more than $10 per share to own Bird Construction (TSX:BDT), Stingray Group (TSX:RAY.A), and Medical Facilities (TSX:DR). The average dividend yield is 4.0%, which should be ideal for forming a solid dividend portfolio.

Monthly payouts

Bird Construction is the country’s premier construction company. Many income investors prefer this industrial stock because the payouts are monthly, not quarterly, like most dividend payers. While the share price is slightly lower from a month ago, market analysts forecast a 23% climb to $12 in the next 12 months. At $9.78 per share, the dividend yield is 3.95%.

I agree with the buy recommendation, given the impressive financial results in Q1 2021 (quarter ended March 31, 2021). Bird reported a 38.2% increase in construction revenue versus Q1 2020. The increase in net income was a mind-blowing 534%. You can throw in the $128.1 million working capital and $79.9 million non-restricted cash for good measure.

Bird had a backlog and pending backlog of $2.62 billion and $1.68 billion, respectively, at the quarter’s end. According to Bird President and CEO Teri McKibbon, it was the 10th successive quarter that its trailing 12-month Adjusted EBITDA margin improved. The integration with Stuart Olson is also paying off handsomely.

Generous dividend

Stingray is equally attractive as the share price is only $7.35. However, the $537.48 million global music, media, and technology company pay a generous 4.08% dividend. Market analysts recommend a buy rating and see a potential upside of 36% to $10.

The company reported an 18.7% decline in revenue for fiscal 2021 (year ended March 31, 2021) versus fiscal 2020 due to a significant drop in radio revenues. However, Stingray’s net income rose 222.9%. Furthermore, there was 3.5% organic growth in Broadcast and Recurring Commercial Music revenues.

The latest development is the partnership with Shaw Communications. On June 4, 2021, the Stingray Music TV app was made available to all Shaw TV IPTV customers across Western Canada. For Shaw TV customers, it means countless hours of uniquely tailored, high-quality music content.

Right growth opportunities

Medical Facilities flies under the radar, although it should be an interesting pick given the nature of the business. Apart from the specialty surgical hospitals in the U.S., the $214.32 million company also owns and operates an ambulatory surgery centre.

President and CEO of Medical Facilities Robert O. Horrar was pleased with the Q1 2021 (quarter ended March 31, 2021) results despite the 29.4% decrease in net income compared to Q1 2020. Meanwhile, Adjusted EBITDA increased 35.4% to $25.1 million. Nevertheless, the 1.3% in facility service revenue is an encouraging sign.

According to Horrar, management remains optimistic on the 2021 outlook primarily due to the continued rollout of the vaccines. Also, Medical Facilities has a strong balance sheet and is ready to capitalize on the right growth opportunities.

Pick one or all

One or all of the three dividend stocks deserve to be in your income portfolios. Initiate positions now while the prices are relatively low.

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 and recommends MEDICAL FACILITIES CORP and Stingray Digital Group Inc.

More on Dividend Stocks

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA…

Read more »

Tractor spraying a field of wheat
Dividend Stocks

Is Nutrien Stock a Buy for its Dividend Yield?

Nutrien is down more than 50% form the 2022 highs. Is NTR stock now oversold?

Read more »

golden sunset in crude oil refinery with pipeline system
Dividend Stocks

Best Stock to Buy Right Now: Enbridge vs TC Energy?

Enbridge and TC Energy rebounded nicely over the past year. Are more gains on the way?

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

2 Utility Stocks That Are Smart Buys for Canadians in November

Are you looking for some of the smart buys to consider in November? These utility stocks offer growth and a…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Is Power Corporation of Canada Stock a Buy for its 5% Dividend Yield?

Is Power Corporation of Canada (TSX:POW) stock's 5% dividend yield worth it? Discover why this resilient stock could be a…

Read more »

hand stacks coins
Dividend Stocks

Here Are My Top 3 Dividend Stocks to Buy Now

These three dividend stocks are ideal for strengthening your portfolio and earning a stable passive income.

Read more »

man touches brain to show a good idea
Dividend Stocks

3 No-Brainer REIT Stocks to Buy Right Now for Less Than $200

REITs have long been touted as some of the best dividend stocks out there if you want recurring, strong income.…

Read more »