PIF:CC - 3 Insanely Cheap Canadian Stocks to Buy for Passive Income
2023-04-25 10:00:00 ET
There are some very cheap Canadian stocks that look very attractive for passive income. Some of these stocks come with some risks. However, if you do some thorough research, you may find the risks are not as bad as they seem. If you are looking for insanely cheap dividend stocks, here are three you might want to consider today.
A beaten-down bank stock for passive income
Even though it has had a decent recent recovery, Toronto-Dominion Bank ( TSX:TD ) stock still looks relatively cheap. This passive-income stock is down 12% over the past year.
Right now, it trades with a price-to-earnings (P/E) ratio of 9.2, which is significantly below its five- and 10-year average of 11. Likewise, its dividend yield of 4.6% is above its five-year average of 4.17% and its 10-year average of 3.96%.
TD does have some fuzz with a rising short position and market participants worried about its outsized economic exposure to the United States. Certainly, there could be some headwinds in the near term, but this stock has stood the test of time.
Yet there are no major signs of serious stress in its direct markets. Likewise, the bank has a very long history of faring through downturns and recessions. You may need to be a contrarian, but TD stock could be a good bargain right now.
A cheap infrastructure stock for passive income
AltaGas ( TSX:ALA ) delivered a record year in 2022. However, over the past year, its stock has declined 23%. Right now, AltaGas has a dividend yield of 5%, which is up significantly from around 3.8% a year ago.
AltaGas operates a regulated gas utility in the northern U.S. and a gas-processing and midstream business in Canada. While the company has had a history of running on too much debt, it has been working to sell non-core assets and improve its balance sheet.
Right now, this passive-income stock trades at a +30% discount to utility peers and a +20% discount to midstream and pipeline peers. It can be a cyclical business, but its rising stream of regulated earnings is helping to offset that over time. Now looks like an intriguing opportunity to add this stock.
An under-followed renewable stock
Polaris Renewable Energy ( TSX:PIF ) is one of the cheapest renewable power stocks you will find. There may be good reason for that. Its mix of hydro, geothermal, and solar projects are spread across Central and South America.
Certainly, these are more politically unstable regions. However, it has long-term 15-year government/utility off-take contracts. Likewise, it has a good track record of navigating in these regions.
The company has a very solid balance sheet (especially compared to peers). It has plenty of opportunities to keep acquiring assets and growing organic production.
This stock trades with a P/E ratio of only 14. That is versus Canadian peers at 25-35 times earnings. This passive-income stock trades with an attractive 6% dividend yield.
The Foolish takeaway
Some cheap stocks can be household names, and others can be a bit harder to find. You can find attractive passive income and good valuations if you are willing to take on some extra risk. If you put in the research and time to understand a business thoroughly, you can often win a successful investment by seeing something that the market is missing.
The post 3 Insanely Cheap Canadian Stocks to Buy for Passive Income appeared first on The Motley Fool Canada .
Fool contributor Robin Brown has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Polaris Renewable Energy. The Motley Fool has a disclosure policy .
2023