2 Deeply Undervalued Dividend Stocks to Buy in November

Here are two stocks that I view as deeply undervalued this November.

| More on:
Man data analyze

Image source: Getty Images

Depending on who you ask, the broader stock market is getting just a bit pricier. Of course, the S&P 500 is a tad more expensive than it was a year ago. That said, we can’t go back in time and buy stocks at cheaper levels. What we can do, however, is keep our powder dry so that we can take advantage of market corrections. But the big question remains: is it better to hoard cash and T-bills, wait around for a market plunge, or continue with a long-term investment strategy as planned?

Indeed, having cash to buy dips is a good move if you’re nervous about investing ahead of a market pullback. However, I don’t think it makes a whole lot of sense to go all-in on cash, especially since inflation is still out there.

Sure, it’s back under control (most recently at just shy of 2% in Canada), but who’s to say it can’t come back in the near future?

Additionally, there’s the opportunity cost of overweighting cash. There’s still a “real” return to be had out there if you know where to look for it. On average, I believe that Canadian stocks have more value to offer. And in this piece, we’ll look at two stocks that I view as deeply undervalued this November.

Perhaps it makes sense to watch the names or buy some shares if you’ve got a cash hoard that you believe is a tad too large. Investing wisely with the long-term (10-15 years) horizon in mind, I believe, is prudent. Far more prudent than timing the stock market — something that not even the best trader or investor on Earth can do, at least not consistently.

CN Rail

CN Rail (TSX:CNR) is a steady railway company that’s been a proven wealth builder and dividend grower over the decades. Over the past few years, the railway has kind of underperformed, at least relative to its historical track record.

Though it’s tough to know when the next economic upswing will jolt shares of CNR, I think the stock is a sound dividend-growth rockstar for any long-term focused portfolio. Further, whenever you can land a below-average or fair multiple on the wide-moat name, you may just score that much deeper value! Today, the stock looks like “dead money” at $150 and change per share after a brutal 16% plunge off recent highs. There have been a great deal of near-term headwinds, but none of them, I believe, change the long-term narrative or the growth trajectory.

All considered, I believe that the 2.25% dividend yield and 17.8 times trailing price to earnings (P/E) make for a blue-chip bargain hiding in plain sight. The rails are “wonderful” places to invest for the long haul, and I’d encourage investors to consider the name while it’s down and out.

Bank of Montreal

Bank of Montreal (TSX:BMO) shares are in a rough spot right now, now at $125 and change per share after going nowhere in the past two and a half years. Indeed, banking pressures have weighed on BMO stock more than some of its better-performing rivals.

The good news is the dividend yield is a lot sweeter today than at its 2022 peak, currently at 4.9%. Further, BMO has a long growth runway in the U.S. market, something that could help it keep growth robust over the next decade. Though the bank stock may be uneventful of late, I see the name as worth pursuing if you seek passive income at a discount.

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 Bank Of Montreal and Canadian National Railway. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Paper Canadian currency of various denominations
Dividend Stocks

Should You Buy the 3 Highest-Paying Dividend Stocks in Canada?

A few dividend stocks saw a sharp correction in November, increasing their yields. Are they a buy for high dividends?

Read more »

money while you sleep
Dividend Stocks

Buy These 2 High-Yield Dividend Stocks Today and Sleep Soundly for a Decade

These stocks pay attractive dividends that should continue to grow.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

$15,000 Windfall? This Dividend Stock Is the Perfect Buy for Monthly Passive Income

If you get a windfall, after debt investing should be your next top option to create even more passive income!

Read more »

senior relaxes in hammock with e-book
Dividend Stocks

3 Canadian Dividend Stocks for Worry-Free Income

These Canadian stocks have consistently paid dividends, generating a worry-free passive income for investors.

Read more »

people relax on mountain ledge
Dividend Stocks

Invest $10,000 in This Dividend Stock for $4,791.70 in Annual Passive Income

A dividend stock doesn't have to be risky, or without growth. And in the case of this one, the growth…

Read more »

ETF chart stocks
Dividend Stocks

2 Top TSX ETFs to Buy and Hold in a TFSA Forever

Don't get crazy. Just think simple growth with these two ETFs that are perfect in any TFSA.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Use Your TFSA to Earn $900 Per Year in Tax-Free Income

This covered call ETF plus a TFSA could be your ticket to high tax-free passive income.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Turn a $15,000 TFSA Into $171,000

$15,000 may not seem like a lot, but over time that amount can balloon into serious cash.

Read more »