TFSA Investors: 2 Unloved Dividend Stocks That Could Roar Back in 2023

Consider North West Company (TSX:NWC) and another defensive dividend play to weather a 2023 storm!

| More on:

Image source: Getty Images

Tax-Free Savings Account (TFSA) investors should at least think about doing some buying, with the 2022 bear market in full swing. Undoubtedly, this bear market could span more than a year. The bearish market strategists at the big banks seem to think there’s going to be more turmoil in the first half of 2023. In any case, self-guided investors should treat these near-term forecasts with a grain of salt.

Indeed, the folks at the big banks are very smart, and they may claim to have a pulse on the economy. Still, the stock market is unpredictable over the near to medium term. Anything can catch us off guard. And after a turbulent few years, many of us forget that surprising good news is still a possibility.

In 2023, TFSA investors should keep it simple and try to act contrarian when they can. While it’s hard to tell when markets will return in rally mode again, new investors should play both sides of the coin with defensive dividend stocks. These types of stocks can pay you whether or not next year sees pain, rather than gain.

In this piece, we’ll consider two intriguing low-correlation stocks (stocks that don’t tend to follow the TSX Index in either direction) that are trading at some pretty compelling valuations at the time of writing.

Consider rural grocer North West Company (TSX:NWC) and top-tier gold miner Barrick Gold (TSX:ABX).

North West Company

North West Company is a mid-cap discount retail play that few Canadians have ever heard of. The company primarily serves the remote northwest, which includes communities in Alaska, and various Canadian provinces. Undoubtedly, the $1.8 billion grocer is in great shape to ride out a downturn, given its competitive positioning and large grocery mix.

The stock trades at a mere 14.9 times trailing price to earnings (P/E). That’s pretty low for a consumer staple with a 4.03% dividend yield. Further, NWC stock can help your TFSA portfolio weather any further volatility hurricanes in 2023. With a 0.63 beta, NWC stock is considerably less volatile than the market averages.

Fresh off a modest third quarter that saw higher sales, I view NWC as a must-buy bargain for those seeking to play defence without having to pay up a premium valuation in what’s likely to be the late stages of a bear market.

Barrick Gold

Barrick Gold is one of the best ways to play gold. Of late, precious metals have been rallying fiercely. Shares of ABX are now up more than 26% from their November 2022 lows. As gold continues to move higher, I expect ABX stock will be in a spot to amplify such moves.

Like North West, Barrick sports a low beta (a mere 0.12 at writing) alongside a sound dividend (2.38% yield). A secure, growing dividend paired with less-correlated shares could make for a great hiding place if 2023 holds a recession that’s anything but mild.

Even if the next bull runs out of the gate, Barrick looks like too good a value play to pass up here now that analysts have muted expectations.

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 recommends North West. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

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

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »