Strengthen Your Portfolio With These 3 Under-$20 Dividend Stocks

Given their stable cash flows, regular payouts, and healthy dividend yields, these three Canadian stocks can strengthen your portfolio.

| More on:

Rising bond yields, geopolitical tensions, weak numbers from China, and multiple interest rate hikes have made investors nervous, dragging the equity market down. Given the weakness in the broader equity markets, investors should look to strengthen their portfolios with safe dividend stocks that are less susceptible to market volatilities.

Given their stable cash flows, regular payouts, and healthy dividend yields, these three Canadian stocks would be excellent additions to your portfolio in this volatile environment.

Algonquin Power & Utilities

Given their low-risk businesses, utility companies deliver stable and reliable financials irrespective of the state of the economy. So, I have selected Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) as my first pick. It serves around one million North American customers, meeting their water, natural gas, and electricity needs. It also owns and operates renewable power-producing facilities that sell their power through long-term power-purchase agreements, shielding against price and volume fluctuations.

Supported by these reliable cash flows, the company has raised its dividends by over 10% annually for the previous 11 years. Currently, its forward yield stands at a healthy 4.9%.

Meanwhile, Algonquin Power & Utilities has committed an investment of $12.4 billion for the next five years, which could grow its rate base at an annualized rate of 14.6%. Supported by these investments and strategical acquisitions, the company’s management projects its adjusted EPS to grow at a 7-9% rate during this period. Despite its high growth prospects and healthy dividend yield, the company’s valuation looks attractive, with its NTM price-to-earnings multiple standing at 18.3. So, I believe Algonquin Power & Utilities would be an excellent buy in this volatile environment.

Pizza Pizza Royalty

Pizza Pizza Royalty (TSX:PZA) would be my second pick. Given its highly franchised business, the company’s cash flows are more stable and predictable compared to its peers. Supported by its solid cash flows, the company had increased its monthly dividend by 8.3% to $0.065/share in February. Meanwhile, its forward yield stands at a juicy 6.1%.

The reopening of non-traditional restaurants and dining spaces amid the easing of pandemic-related restrictions could drive its sales. Meanwhile, the company has restarted its restaurant network expansion plans with the hope of increasing its restaurant count by 5% this year. Strengthening its digital and pickup channels could continue to resonate with its customers. So, I believe Pizza Pizza Royalty’s dividend is safe.

TransAlta Renewables

TransAlta Renewables (TSX:RNW) reported a solid first-quarter performance last week, with its adjusted EBITDA and free cash flow increasing by 13% and 9%, respectively. Since the first quarter of 2021, the company has added 428 megawatts of power-producing capacity, which has boosted its financials. It has a solid pipeline of projects, with over two gigawatts of projects in the evaluation stage. With a liquidity of $900 million, the company is well positioned to support its growth initiatives.

Further, TransAlta Renewables’s long-term contracts and strategic acquisitions could also drive its financials in the coming quarters. It could also benefit from the rising transition towards clean energy. So, its outlook looks healthy. Meanwhile, the company currently pays a monthly dividend of $0.07833/share, with its forward yield at 5.42%.

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 has positions in and recommends PIZZA PIZZA ROYALTY CORP. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

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 »