Undervalued Canadian Dividend Stocks – October 2018


52
12 shares, 52 points

Undervalued Canadian Dividend Stocks for October 2018

Below is a list of potentially undervalued Canadian dividend stocks.  These stocks have the potential for greater total returns due to the undervalued nature and the potential capital gains upside, along with the dividend.  I will present some basic financial and fundamental information, but with any investment, you need to do your own research and determine if any of these stocks are right for your portfolio.

Husky Energy Stock

husky energy

Husky Energy Inc. ticker symbol HSE is an energy company and is perhaps not top of anyone’s dividend list as it cut its dividend a few years ago, but it is back in terms of a dividend payer. HSE stock is currently trading at $20.25 and the future cash flow value is approximately $25.92.  So looking a potentially at 22% upside.

The dividend is nothing crazy at 2.47%, but it is on my list because it is a dividend payer and is currently undervalued.  The dividend is safe with a current payout ratio of 19%, this is a very conservative and safe payout ratio.

Current Share Price

20.25$

Future Cash Flow Value

25.92$

Dividend Yield

2.47%

Dividend Payout Ratio

19%

  • Dividend Yield 2.47%
  • Dividend Payout Ratio 19%
  • Dividends have not been stable over past 10yrs. and the dividend was completely cut in 2016.
  • Husky has not increased the dividend reliably over past 10yrs

I would personally not invest in Husky as a dividend investor. There is just not enough positives for me. I know the stock is undervalued but only by approximately 22%, and the dividend is not that high. Be careful with this stock and as always do your due diligence and consult a professional.

IGM Financial

IGM Financial Dividend

IGM Financial ticker symbol IGM manages investment funds and other managed financial assets in Canada.  This stock is approximately 33% undervalued based on current price of $32.60 and future cash flow value of $50.75.  IGM Financial is a top dividend payer on the Canadian stock market, with a current dividend yield of 6.9%.  The dividend track record for IGM is also very good, as they have increased the dividend regularly over past 10 years.  The payout ratio is currently 88% which is okay, but forcasts show that future payout ratio in the next 3 years should be approximately 61%.

Current Share Price

32.60$

Future Cash Flow Value

50.75$

Dividend Yield

6.9%

Dividend Payout Ratio

88%

  • Dividend Yield 6.9%
  • Dividend Payout Ratio 88%
  • IGM has paid a dividend reliably over past 10yrs
  • IGM has increased the dividend consistently over the past 10yrs

I like this stock as a dividend play. Solid dividend yield, and is undervalued by roughly 33%. Solid dividend paying track record for IGM Financial.

Norbord

norbord stock

Norbord Inc ticker symbol OSB is a company that makes and sells wood panels.  I know not the sexiest business, but hey it pays a solid dividend yield and is undervalued right now.  The current stock price for Norbord is $35.57 and the future cash flow value is roughtly in the area of $76.81.  The current dividend yield for OSB is 6.6% and the payout ratio for the dividend is low at 28%, so dividend looks secure.

Current Share Price

35.57$

Future Cash Flow Value

76.81$

Dividend Yield

6.6%

Dividend Payout Ratio

28%

  • Undervalued by more than 50%
  • Dividend Yield 6.6%
  • Dividend Payout Ratio 28%
  • Dividends have not been stable over past 10yrs
  • Dividend payout has not increased in past 10yrs and has actually decreased.

Do your research on Norbord stock before investing, as there are some trade headwinds and with the current US administration who knows how trade issues will go. The other issue is that Norbord has a history of cutting the dividend, so current yield of 6.6% could be adjusted if issues arise.

Laurentian Bank of Canada

laurentian bank dividend

Laurentian Bank is the 8th largest bank in Canada, with the majority of its locations situated in the province of Quebec.  With the current stock price of $40.66 and a future cash flow value of $58.25 the stock is undervalued by 30%.  In terms of Laurentian Bank dividend it is very good in all categories.  The dividend yield is 6.3% right now and the payout ratio is 47%.  Laurentian Bank also has a stellar track record of paying a dividend and has been uninterupted over past 10 years.  The dividend has also seen regular increases, even during the 2008-2009 financial crisis.  Laurentian Bank also made my list of Top Canadian Dividend Stocks – October 2018 

Current Share Price

40.66$

Future Cash Flow Value

58.25$

Dividend Yield

6.3%

Dividend Payout Ratio

47%

  • Undervalued by 30%
  • Dividend Yield 6.3%
  • Dividend Payout Ratio 47%
  • Laurentian has paid a dividend reliably over past 10yrs
  • Laurentian has increased the dividend consistently over the past 10yrs

Laurentian Bank Stock ticks all the right boxes. If you are looking for a solid, reliable dividend stock it does not get much better than LB. With the current price dip in the stock it might just be the time to buy some shares.

 

 

 

This is not financial advice and all financial investments carry risks. Investors should seek financial advice from professionals before making any investment. I wrote this article myself and it expresses my opinions. I have no business agreement with any company mentioned in this article.


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