What’s up guys, it’s wiz.
Welcome back to the channel. If you are new, I am a Canadian investor. I cover a whole lot of information about investing in Canada and do research into our Canadian market. I dive into growth investing, dividend investing and Canadian small caps / penny stocks. Today, I will be going over 2 oversold Canadian dividend stocks. The market correction is now impacting all sectors in the TSX Index, but some top dividend stocks now appear undervalued and should deliver attractive total returns for patient investors. For new investors, you need to join Wealthsimple Trade if you are looking to start investing and live in Canada. If you use my link in the description to join Wealthsimple, you get 2 free stocks worth up to 4500$ so do not miss out.
Let me start off with Fortis (ticker symbol FTS). Fortis is a Canadian utility company with $58 billion in assets spread out across Canada, the United States, and the Caribbean. The businesses get 99% of their revenue from regulated assets, so cash flow should be relatively predictable and reliable. Homeowners and companies need to keep the lights on, heat water, and warm or cool the building regardless of the state of the economy. Fortis grows through a combination of strategic acquisitions and internal development projects. Management hasn’t done a large deal for several years, so it wouldn’t be a surprise to see Fortis announce a new takeover in the medium term, as the utility sector consolidates. On the development side, Fortis is working on a $20 billion capital program that will boost the asset base by about a third through 2026. As a result, management is providing guidance for average annual dividend growth of 6% until at least the end of 2025. That’s the kind of stability TFSA and RRSP investors are looking for right now with so much economic uncertainty on the horizon. Fortis increased the payout in each of the past 48 years, so there shouldn’t be any reason to doubt the dividend outlook. Fortis trades near $60 per share compared to $65 last month. The pullback looks overdone, and investors can also now pick up a 3.5% dividend yield.
The second Canadian stock here that seems to be oversold is Pembina Pipeline (ticker symbol PPL). Pembina Pipeline is a key player in the midstream segment of the Canadian oil and natural gas sector with pipelines, gas gathering, gas processing, and logistics operations that help oil and natural gas producers move their products to customers. Pembina Pipeline also has a propane export terminal and is evaluating LNG opportunities which is becoming popular. The business has grown considerably over the past 65 years through acquisitions and capital programs. Pembina Pipeline should benefit from the continued rebound in the energy sector as producers begin to shift more capital to boost production. Canadian oil and natural gas is in high demand, as the world searches for reliable sources of the commodities. Pembina Pipeline pays its dividend monthly. This makes the stock attractive for retirees and other investors seeking steady passive income for a TFSA portfolio. The share price is now around $46 from the 2022 high around $53.50. Investors who buy at the current price can secure a solid 5.5% dividend yield. It wouldn’t be a surprise to see Pembina Pipeline become a takeover target in the next few years. The business could be attractive for one of the energy infrastructure giants or even an alternative asset management firm.
Hope you guys enjoyed some of this info about both of these 2 Canadian dividend stocks. Fortis and Pembina Pipeline appear undervalued right now and pay attractive dividends. If you have some cash to put to work in a TFSA or RRSP focused on income or total returns, these stocks deserve to be on your watchlist. Please watch my previous videos on Canadian stock recommendations and let me know of any Canadian stocks you want me to look into and give my opinion on. Let me know in the comments, since I really want to expand my knowledge in the Canadian market, and you also expand your own knowledge by asking questions. It is a win-win situation. If you did enjoy this video, leaving a like really helps grow the channel! Thanks for watching, I’ll see you guys in the next video!