3 Super-Cheap, High-Yield Income Picks to Watch

Investors looking to beat the broader stock market on the basis of total return should consider Nutrien (TSX:NTR) and two other high-yield picks.

| More on:

The U.S. markets may be off to a magnificent start, but the TSX Index has barely budged, just up 1.5% year to date versus the S&P 500’s 14.5%. Undoubtedly, U.S. stocks, led by tech, could help the S&P 500 continue the winning streak in the second half of the year.

However, I’d argue that TSX value stocks look best poised to catch up to their high-flying growth counterparts. Further, if the stock market’s run does end in a correction, its value could hold up, and even edge higher.

In this piece, we’ll look at three cheap TSX stocks with sizeable yields that I don’t think will flinch if the S&P 500’s second half sees it forego some of the first-half gains.

Nutrien

Nutrien (TSX:NTR) is a fertilizer company that formed from the merging of Agrium with Potash Corp. of Saskatchewan. The company is a force in the agricultural commodity scene, with a terrific retail business that can help weather any less-than-ideal economic climates.

Back in 2021 and 2022, Nutrien stock was a major winner. Earlier last year, Nutrien spiked, as commodity prices surged while stocks (mostly growth) sagged in what were the early innings of the 2022 bear market. Many commodities really shined last year, but the tables have since turned, and NTR stock has been losing ground fast.

The stock is down 45% from its 2022 peak and more than 20% year to date. Indeed, potash prices have fallen, and the latest quarter was far from perfect. Still, I view Nutrien as a great portfolio diversifier with a pretty solid dividend (3.62% yield). Further, agricultural commodities won’t be on the descent forever, especially as world population growth paves the way for higher crop yields.

With a single-digit price-to-earnings ratio, Nutrien is a great value buy on the dip. Just do be warned that earnings are expected to take a hit, as the company moves on from one of its best few years in recent memory. The good times may be over, but there’s still plenty of value and cash flow to be had by income investors.

SmartCentres REIT

SmartCentres REIT (TSX:SRU.UN) is a retail-focused real estate investment trust (REIT) that’s really been hurting, falling over 28% since its 2022 peak. Indeed, the distribution yield has swollen considerably amid the plunge.

With a 7.93% yield, SRU.UN shares are incredibly bountiful, even as income investors turn against retail real estate. With strong tenants and a residential expansion plan, I don’t think Smart will be down for too long. Further, the payout doesn’t look to be under any extreme level of stress as to call for an imminent reduction.

For now, I view Smart as a great value to capitalize on as commercial real estate fears spread to retail REITs.

Pizza Pizza Royalty Corp.

If you love royalties, Pizza Pizza Royalty (TSX:PZA) is a terrific option to consider. Shares of the name have been in rally mode since bottoming out back in 2020.

With a 6.08% yield, PZA is a bountiful way to gain ground on high levels of inflation. Further, a recession and high inflation could continue to steer consumers away from pricier pizza brands to Pizza Pizza, which offers a great value for money on its offerings.

I’m a big fan of Pizza Pizza for those with a hunger for handsome royalties.

The bottom line for income investors

Income investors may find it profitable to buy the following affordable high yielders going into the second half of 2023. I’m the biggest fan of SmartCentres REIT right here. The pessimism is getting quite absurd.

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 positions in SmartCentres Real Estate Investment Trust. The Motley Fool recommends Nutrien and SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Dividend Stocks

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »

young people stare at smartphones
Dividend Stocks

GST/HST “Vacation”: Everything Canadians Need to Know

The GST/HST "vacation" is a little treat for the holidays, along with a $250 payment. What should you do with…

Read more »

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 »