1 Dirt-Cheap Canadian Stock to Buy and Hold Forever

Great-West Lifeco (TSX:GWO) is a top dirt-cheap dividend stock for Canadian investors to check out in the second half of 2021.

| More on:

There’s been a lot of things for investors to worry about in 2021, with the horrific “Delta” COVID-19 variant and higher-than-expected levels of inflation, but that hasn’t stopped most Canadian stocks from surging to close off one of the best first halves in quite a while.

Undoubtedly, Mr. Market could give up a big chunk of the gains posted over the past seven months. But pending a high-impact/low-probability event like a truly insidious strain of COVID-19 that renders today’s vaccines far less effective, I’d continue to navigate the second half of 2021 in a cautious, but bullish fashion.

There’s some pretty big earnings growth on the horizon, and if you don’t think the Delta variant will cause Canada’s economy to grind to a halt after a year and a half climb, it may be worthwhile to take a step back to consider the dirt-cheap Canadian stocks that still sport swollen dividend yields.

Insist on “easier” (or less risky) money with dirt-cheap Canadian stocks

With U.S. 10-year rates in the 1.1-1.2% range, many are speculating on the battered growth stocks that were battered earlier this year. While many unprofitable hyper-growth plays may be worth their pie-in-the-sky multiples, I’d argue that many of the “sexier” names out there, like the meme stocks, are at high risk of crumbling into year’s end if rates were to continue higher again.

Indeed, many pundits see rates making a bounce back from these levels. Such ricochet in rates could be guided by renewed inflation jitters, as concerns over this variant begin to calm.

The way I see it, high-multiple growth stocks are the high-hanging fruit that may or may not make sense to grab while there are so many lower-hanging fruits that investors can more safely grab without running the risk of suffering an epic fall. Sure, rates are low now.

given the recent volatility in the bond market, things could change in a hurry, and it’s the beginner momentum chasers that could be among the most vulnerable to steep losses.

In this piece, we’ll look at a neglected Canadian dividend stock in Great-West Lifeco (TSX:GWO). Shares of the financial sport a very handsome yield of 4.7% at the time of writing.

Great-West Lifeco: A great dividend at a dirt-cheap multiple

Great-West Lifeco is a Canadian insurer with a sizable $34.5 billion market cap. Like most other financials, GWO shares are currently taking a bit of a breather after enjoying an epic rally off its lows last year.

As the stock continues dragging its feet in what looks to be a sideways correction, I’d look to initiate a position, as I don’t think the booming economy is fully factored into current valuations.

The business of insurance can be quite cyclical. Just look at the aftermath of the last recession. Catch them in the early innings of an economic expansion and the gains could be sizeable.

At just 10.4 times trailing earnings, Great-West still looks like a bargain, given the tides are about to turn back in its favour in a big way — and with that, some pretty generous dividend hikes.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Coronavirus

A airplane sits on a runway.
Coronavirus

3 Fresh Stocks I’m Likely Buying in 2025

I am likely buying Air Canada (TSX:AC) stock in 2025.

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Coronavirus

Canadian RRSP Stocks to Buy Now for Retirement

Alimentation Couche-Tard Inc (TSX:ATD) is a quality retirement stock.

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Coronavirus

Retirees: What Rising Inflation Means for Your CPP Payments

If you aren't getting enough CPP, you can consider investing in stocks and ETFs. Canadian National Railway (TSX:CNR) is one…

Read more »

Coronavirus

Air Canada Stock Is Starting to Get Ridiculously Oversold

Air Canada (TSX:AC) has been beaten down to absurd lows.

Read more »

Coronavirus

Should You Buy Air Canada Stock While it’s Below $18?

Air Canada (TSX:AC) stock is below $18. Should you invest?

Read more »

Illustration of data, cloud computing and microchips
Stocks for Beginners

3 Canadian Stocks That Could Still Double in 2024

These three Canadians stocks have been huge winners already in 2024, but still have room to double again in the…

Read more »

Aircraft Mechanic checking jet engine of the airplane
Coronavirus

Can Air Canada Stock Recover in 2024?

Air Canada (TSX:AC) stock remains close to its COVID-19 era lows, even though its business has recovered.

Read more »

A airplane sits on a runway.
Coronavirus

3 Things to Know About Air Canada Stock Before You Buy

Air Canada stock continues to hover below $20 despite the sharp rise in travel demand seen across the industry. What's…

Read more »