MRU:CC - 3 Undervalued Dividend Stocks to Generate $431 in Passive Income

2023-06-14 12:00:00 ET

Finding undervalued dividend stocks can be pretty tricky. Especially in these days when many dividend stocks remain far below 52-week highs. However, when you look at oversold stocks, that list becomes far shorter.

Today, I’m going to look at three undervalued dividend stocks that remain in oversold territory. That makes them a great choice for those seeking passive income and growth right away.

George Weston

George Weston ( TSX:WN ) shares remain in oversold territory, trading at 12.1 times earnings as of writing, and with a relative strength index (RSI) at 23.6. It currently offers a dividend yield at 1.86% on the TSX today.

The major brand, owner of several large Canadian companies, saw shares plummet back in May, falling back to prices the company and its shareholders haven’t seen since November of last year. However, this decline could therefore make it a great time to buy.

George Weston reported a first-quarter rise in profit year over year, as well as revenue. The company also increased its dividend during the quarter, with profit reaching $363 million. Analysts now state the company could outperform given its exposure to major brands, as well as growing profit. So it could be a strong time to consider this stock while it remains in oversold territory. Here is what a $5,000 investment could bring in today.

Metro stock

It’s important to note that part of the reason profit was up is because of inflation. This was also the case with Metro ( TSX:MRU ) during its earnings that saw profit rise 10.4% year over year. However, in response, Metro stock has since plunged. Shares now trade at 18.7 times earnings, and hold a 24.96 RSI as of writing as well.

The issue then becomes, what about the long term? When inflation slows, will Metro stock be able to bring in such high numbers? Earnings per share growth was up 14%, driven by the 7% sales growth. Moderate inflation should continue during the summer; however, there has been slower demand for products .

Even so, analysts believe the reaction to shares is overboard. Investors should now consider picking up the stock while it trades down 7% year to date, and down 10% since earnings. They’ll gain a 1.73% dividend yield as well at this point. Here is what a $5,000 investment could bring in today.

Canadian Utilities

Then there’s another revenue driver entirely. No matter what we need utilities , which is why many investors flocked to Canadian Utilities ( TSX:CU ) as the market started to drop. This caused shares to soar, but since then shares have come crashing down.

Mulltiple reasons were behind the decline. First, the global utility company was taking out returns, which was a fair thing to do. However, then earnings came in with not the best news. The company beat out estimates during its latest earnings report, but this came after missing the quarter before. So now investors don’t know what to think.

Analysts meanwhile believe that utilities will see “softer” prices, predicting a weaker market in the near term. This has likely been part of the reason Canadian Utilities stock has fallen further, down 9% in the last year, and 9% in the last month after earnings. Here is what a $5,000 investment could bring in today.

Investors can now pick up the stock with a dividend yield at 4.97%, trading at 13.2 times earnings and an RSI of 27.2. This won’t last long in all likelihood, and given this is the only Dividend King on the TSX today, it might be a great time to pick up this oversold stock.

The post 3 Undervalued Dividend Stocks to Generate $431 in Passive Income appeared first on The Motley Fool Canada .

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

2023