2 Dividend Stocks That Simply Don’t Get Enough Credit

Rogers Communications (TSX:RCI.B) and another top dividend stock that offers value too good to pass up if you’re looking beyond the tech scene.

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Growth is having its moment to shine again, even with rates still at heights not seen in a long time. Undoubtedly, many new investors who got started investing in the 2020s may have no idea what to expect with rates at higher levels.

Indeed, heightened costs of borrowing will weigh on corporate earnings, with growth stocks taking a bigger punch to the gut. The further earnings lie into the future, the more the punishment to be dealt. And the higher the multiple, the more downside risk there is for growth-focused investors.

Despite the climb in rates, the rebound in tech this year has been impressive. Despite high rates, investors are already focused on a future where rates could begin to steady and potentially descend. If such a situation pans out, the negativity (focused on tech) back has been overextended during last year’s selloff.

What about dividend stocks?

Value stocks and dividend plays with yields on the high end have been quite neglected of late. Tech is back in the spotlight again, but let’s not forget about those steady dividend payers. I think there’s still plenty of value to be had for investors who just aren’t comfortable putting money on tech’s ongoing recovery. Indeed, the artificial intelligence revolution may justify the tech surge, but let’s not forget that there’s no excuse for betting on trends without conducting a thorough valuation first.

In this piece, we’ll look at two stocks that have faded into the background amid tech’s recent run. Yes, excitement has returned to markets, just like back in 2021. But that’s why I’d steer away from what’s hot and go toward what’s not.

Suncor Energy

Suncor Energy (TSX:SU) had a relatively decent 2022, as tech stocks and the Nasdaq 100 slid rapidly. This year, Suncor is making up for last year’s nice run by dragging its feet relative to the U.S. and Canadian market averages. The stock is down more than 5% year to date. Oil prices have pulled back a bit and could be headed for another leg lower if the coming recession turns out bumpier than expected.

Indeed, any commodity company can be a volatile play. Fortunately, SU stock’s valuation, I believe, implies a slight margin of safety. At below $40 per share, the stock trades at around 5.8 times forward (or 6.6 times trailing) price to earnings. Macro and industry headwinds considered, that’s cheap. I think too cheap. The main draw is the 5.28% dividend yield and management’s commitment to trimming costs and driving efficiency.

Rogers Communications

Rogers Communications (TSX:RCI.B) stock is a relative underdog in the Canadian telecom scene. Sure, it’s player number three of the Big Three when it comes to market cap ($31.5 billion at writing). That said, I find shares to be the cheapest of the batch at 16.7 times trailing price to earnings. Further, the 3.4% dividend yield, while less than its two bigger brothers, is still bountiful and could grow reasonably over the years.

Rogers stock, like the rest of the Canadian telecoms, is in a rut right now. But if you’re in for the long run, I think there’s ample reason to buy this dip.

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 Rogers Communications. The Motley Fool has a disclosure policy.

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