3 Value Canadian Stocks to Buy in August 2021

Are you looking for more secured returns? Consider these value Canadian stocks that pay nice dividend income and offer decent upside.

| More on:

Investors have a bigger chance of making money when they invest in undervalued stocks that pay safe dividends. By buying stocks when they’re trading below their intrinsic values, you better secure price appreciation potential. Additionally, you’ll also get a higher yield on your investment.

With the above mindset, here are three value Canadian stocks that could be good buys this month at least for a starter position.

Value stock Manulife

After correcting from the $27-per-share level, Manulife (TSX:MFC)(NYSE:MFC) stock is finally showing signs of life, as it appreciated to the $25 range after bottoming at about $24.

Manulife’s results in the first half of the year (H1) were pretty solid with core earnings growing 28% year over year to $3.3 billion, which also translated to a jump of 28% on a per-share basis.

Additionally, it saw a rebound in returns on equity from 7.9% in H1 2020 to 14.3% in H1 2021, signifying the normalization of the business from last year’s pandemic disruptions.

The global life and health insurance company gained new business value across the geographies it operates in, including Asia, Canada, and the United States.

Currently, at $25.60 per share at writing, Manulife stock pays a nice yield of close to 4.4% on a payout ratio of about 34%. That’s a low payout ratio. So, investors can expect a growing dividend over time. The value stock trades at only about 8.6 times its normalized earnings, which should provide above-average price appreciation for long-term investment.

TMX Group

TMX Group (TSX:TMX) is also a good value given its quality and long-term growth potential. The company has been growing at a double-digit rate in recent years, as it acquired complementing businesses and expanded its products and services.

TMX owns the Toronto Stock Exchange (TSX) and TSX Venture Exchange. Therefore, it makes money from initial public offerings and subsequent equity offerings. It follows that TMX is also responsible for equities and fixed-income trading and clearing, and takes care of the record keeping to determine who is entitled to dividend or interest payments.

Furthermore, the company owns TSX Trust, the biggest Canadian-owned transfer agent and provider of corporate trust services. Additionally, it provides real time equity and derivative market data, and historical market data for investors’ analytical purposes.

In May, the TMX just increased its dividend by 10%. Currently, it offers a solid 2.2% yield.

Parex Resources is also undervalued

For the longest time, many investors have ignored Parex Resources (TSX:PXT) because it didn’t pay a dividend before. However, Parex has been one of the best oil and gas producers on the TSX to invest in. Because it produces oil in Colombia, it enjoys premium Brent oil prices.

Its operating funds flow per share more than doubled to $1.99 in H1 2021 versus H1 2020 thanks partly to the rebound from the pandemic.

Despite being very well managed, the value stock is still subject to the ups and downs of energy prices. Therefore, investors would be smart to aim to buy low and sell high.

The energy stock appears to be severely undervalued trading at a little over five times cash flow. It’s a good time to start a position in Parex Resources and to potentially add more should it dip further.

The company is a frequent buyer of its own stock, allowing long-term shareholders to grow their stakes in the business without having to buy more shares.

What’s more to like is that Parex finally decided to start paying a dividend. At the recent quotation of $19 and change per share, it’s good for a yield of 2.6%.

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.

The Motley Fool recommends TMX GROUP INC. / GROUPE TMX INC. Fool contributor Kay Ng has no position in any of the stocks mentioned.

More on Stocks for Beginners

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

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 »

grow money, wealth build
Dividend Stocks

3 Top High-Yield Stocks to Buy in November

If you want passive income, high yield dividend stocks are the clear choice. These are the best, and safest, out…

Read more »

Stocks for Beginners

Where will Loblaw Stock be in 5 Years?

Want a great food stock that can provide growth and income? Here's why Loblaw stock can offer that and more.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

3 Canadian Infrastructure Stocks to Buy Now

Infrastructure makes up everything we use, from the water we drink to the roads we drive. And these three infra…

Read more »

Sliced pumpkin pie
Stocks for Beginners

Ready to Invest With $2,000? 4 Stocks for November

Got $2,000 to start a new investment portfolio? Try these four high quality Canadian stocks for long-term wealth compounding.

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy Right Now for Less Than $1,000

Not all tech stocks are the risky investments that many think they are. Which is why we're focusing on the…

Read more »

Dividend Stocks

Is TELUS Stock a Buy for Its 7% Dividend Yield?

TELUS stock looks pretty enticing with a 7% dividend yield. But what else should investors consider?

Read more »