A share price drop of 30% does not automatically mean that there is something wrong with the company. In many cases, these sales are driven by short-term headwinds, shifting interest rate expectations or investors temporarily losing patience. These situations are often exactly what long-term investors should be waiting for.
The highest quality dividend stocks are meant to be owned for years, not traded in and out. So if you can buy them at a discount, you still get access to all their long-term growth potential and dividend income, but now you’re also locking in a higher return on costs and giving yourself more upside as the company continues to grow from a lower entry point.
What’s important to understand, however, is that not every stock that’s down 35% is worth buying. The key is finding companies that are cheap for the right reasons, and then making sure they have sustainable operations, sustainable dividends and balance sheets strong enough to weather volatility without sacrificing long-term growth.
So with that in mind, if you’re looking for great TSX dividend stocks to buy now, here are two ultra-cheap picks you can add today and hold with confidence for years to come.
One of the best TSX dividend stocks to buy right now
If you’re looking for high-quality TSX dividend stocks to buy while they’re undervalued, Canadian Apartment Properties REIT (TSX:CAR.UN) is one of the best options Canadians have today.
CAPREIT, as it is known, is trading about 30% below last year’s high and nearly 40% from its 2021 all-time high, creating a significant buying opportunity for investors.
As the largest residential real estate investment trust (REIT) in Canada with a huge, well-diversified portfolio of residential properties spread across the country, CAPREIT is about as reliable as it gets.
People always need a place to live, which is why CAPREIT has been able to generate stable cash flow in a wide range of economic environments.
Therefore, the fact that CAPREIT is trading so cheap and its dividend yield has risen dramatically makes it one of the best dividend stocks to buy on the TSX today.
In fact, CAPREIT dividend yield now stands at 4.2%. That is well above the average dividend yield over five and ten years of 3.1% and 3.3% respectively.
Furthermore, CAPREIT today trades at a price-adjusted capital from operations (P/AFFO) ratio of just 15.5 times. Not only is that well below the five- and 10-year average forward P/AFFO ratios of 22.8 times and 23.5 times, respectively. It’s essentially the cheapest it’s ever been.
So if you’re looking for top TSX dividend stocks to buy now and hold for years, CAPREIT and its current discount offer investors a huge opportunity.
A growth share with high potential and an attractive return
Besides CAPREIT, there’s another top TSX dividend stock to buy while it’s trading so cheap easy (TSX:GSY).
The non-prime lender is now down about 40% from its 52-week high, despite the underlying business continuing to perform exceptionally well.
While the stock has temporarily retreated due to higher bad debt charges earlier this year, what has separated goeasy from most lenders over the years is its execution and discipline.
goeasy has an incredibly strong underwriting process, is highly focused on risk management and has steadily grown its loan portfolio to keep repayment rates stable. That’s exactly why it has been able to post one of the strongest long-term track records on the TSX.
Over the past five years, goeasy has increased its dividend by more than 120%. Moreover, after the recent sell-off, that dividend now offers a yield of over 4.5%. Furthermore, goeasy still pays out less than 40% of its profits through dividends.
That alone shows how reliable goeasy is. So if you’re looking for a top TSX dividend stock to buy now, there’s no doubt that goeasy is one of the best to consider while trading so cheaply.
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