PZA:CC - 3 Cheap Dividend Stocks to Buy Under $30
2023-12-13 16:00:00 ET
Historically, dividend stocks have outperformed non-dividend-paying stocks. Besides, these companies are less susceptible to market volatility due to their regular payouts. With economists predicting an economic slowdown in the United States next year, the equity markets could remain volatile in the near term. So, dividend stocks could help strengthen your portfolios while delivering a stable passive income in a challenging environment.
Meanwhile, here are three high-yielding cheap dividend stocks that you can buy under $30 right now.
Pizza Pizza Royalty
One of the top under-$30 dividend stocks to buy right now would be Pizza Pizza Royalty ( TSX:PZA ), which has raised its monthly dividend eight times since April 2020. Given its highly franchised business model, with the company collecting royalties from its franchisees based on their sales, rising prices and wage inflation have not impacted its financials. Strong same-store sales and an expanding restaurant network have increased its royalty pool income, thus allowing it to raise its monthly dividend multiple times in the last few years.
With a monthly dividend of $0.0775/share, the owner of Pizza Pizza and Pizza 73 brands offers a juicy forward dividend yield of 6.52%. Meanwhile, with the company focusing on menu innovation, promotional activities, and renovating its old restaurants, I expect its same-store sales to remain strong in the coming quarters. Further, it continues to expand its footprint with the government lifting restrictions on all commercial construction. These growth initiatives could boost its financials, thus allowing it to continue rewarding its shareholders by paying dividends at a healthier rate. PZA trades at a cheaper NTM (next 12 months) price-to-earnings multiple of 15.7, making it an attractive buy.
Telus
Second on my list would be Telus ( TSX:T ), which offers a forward dividend yield of 5.91% and trades at an attractive NTM price-to-sales multiple of 1.7. Given the recurring revenue stream, telcos enjoy stable cash flows, thus allowing them to reward shareholders with consistent dividend growth. Since 2024, Telus has returned around $24 billion to its shareholders through dividends and share repurchases. Since May 2011, the company has raised its dividend 25 times.
Meanwhile, telecommunication services are becoming essential in this digitalized world, thus expanding the addressable market for Telus. Meanwhile, the company is strengthening its 5G, 5G+, and broadband infrastructure through aggressive capital investment to grow its customer base. By the end of the third quarter, the company’s 5G services covered 85% of the country’s population while connecting 3.1 million premises with its pure fibre network. Besides, its other high-growth segment, Health Services and Agriculture & Consumer Goods Services, also offers healthy growth prospects. So, I believe Telus would be an excellent buy right now.
Northland Power
My final pick would be Northland Power ( TSX:NPI ), which has an economic interest in clean energy-producing facilities with a total production capacity of 3.2 gigawatts. The company’s cash flows are stable and predictable as most of its revenue is from long-term PPAs (power purchase agreements). The weighted average life of these PPAs stands at around 14 years, thus providing stability to its financials. It currently pays a monthly dividend of $0.10/share, with its forward yield at 5.51%.
Meanwhile, the clean energy company can benefit from the growing transition towards clean energy. It has 16 gigawatts of power-producing facilities in the pipeline. Of these projects, the company expects to put 2.8 gigawatts of power-producing facilities into service by 2027, thus raising its total production capacity to 6 gigawatts. Amid these growth initiatives, management expects its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to grow at a CAGR of 7–10% through 2027.
Given the visibility of its future dividend payouts, high yield, and a cheaper price-to-book multiple of 1.3, I am bullish on Northland Power.
The post 3 Cheap Dividend Stocks to Buy Under $30 appeared first on The Motley Fool Canada .
Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy .
2023