The TSX today doesn’t seem to know what to do with itself. And this can translate into investors being unsure of what to do with their investments. While 52-week highs hit $22,213, the TSX today remains around $20,000 and has for some time.
This is likely why investors have been focusing so much on dividend stocks. It seems as though it’s all investors care about these days! The issue is, when the market recovers you’re going to want valuable dividend stocks — ones that are going to recover and provide lots of income to boot. This is why today, I’ll be focusing on two dividend stocks that are dirt cheap and due to rise.
BMO stock
First up, we have one of the Canadian banks. These banks have been trading in value territory after dropping off with the rise of interest rates and inflation. Financial institutions in the past have failed around the world during recessions. We’ve already seen this happen in the last year in the United States.
The thing is, while these banks certainly aren’t doing amazing, they aren’t too bad, either. In fact, since there isn’t as much competition in Canada, Canadian banks offer protection through the ability to collect provisions. These provisions for loan losses are what make them a safe investment, even when shares drop.
Yet again, we want cheap dividend stocks due to bounce back. In this case, Bank of Montreal (TSX:BMO) is a superior option. BMO stock expanded before the drop through its acquisition of Bank of the West. It’s now grown into the United States, which should bring in a lot of revenue when the market recovers.
Meanwhile, it’s down 13% in the last year, trading at just 11.53. This puts it in value territory, and Canadian banks such as BMO stock have rebounded quickly after a recession or downturn. This is why now is the time to get the cheap stock while it still has a 4.97% dividend yield as of writing.
Canadian Utilities
Utility stocks were some of the first to rise during the beginning stages of the economic downturn. Investors took their money out of growth stocks and put them into essentials. This included utilities, which will be around to keep the lights on no matter what’s going on.
The problem was, this created a boost in these companies, putting these dividend stocks in overbought territory. So, there was a selloff. And that now provides an opportunity for investors wanting back in on the TSX today.
One of the best options is Canadian Utilities (TSX:CU). Canadian Utilities stock is one of the best and cheapest dividend stocks to provide long-term income. It’s the only company on the TSX today that’s increased its dividend every year for the last 50 years! Yet after the drop, Canadian Utilities stock is now in value territory.
Shares are down about 22% in the last year, with the market reacting to the company’s exposure to interest rate increases. Yet now, Canadian Utilities stock trades at just 13.87 times earnings, with a 5.58% dividend yield! One that again, rises every year! So, this is certainly another of the cheap dividend stocks I would urge investors to consider — especially if you’re after safe, long-term income.
