Home » Investing » 3 Undervalued TSX Stocks to Buy Today for Passive Income
These undervalued dividend stocks are perfect long-term buys for solid income, with strong returns at these low-cost levels.
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Amy Legate-Wolfe
Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances.
Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities.
Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. Amy’s work can be found regularly on the Financial Post and MoneyWise Canada.
When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog Finley, and travel.
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Latest posts by Amy Legate-Wolfe (see all)
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It’s a great time to buy high-quality companies on the TSX today. Many remain undervalued, with some even trading in oversold territory. These valuable prices mean you can also lock in a dividend yield at incredibly low rates. That allows you to collect more dividends that you can reinvest in, as the market continues to correct.
With that in mind, here are three undervalued stocks on the TSX today you can buy for passive income.
Not all tech stocks are bad
If you want stability from tech stocks, then I would consider Calian Group (TSX:CGY) on the TSX today. It’s a solid company that’s created a growth-through-acquisition strategy that continues to bring in cash.
Today, you can pick it up with a dividend yield of 1.65%. While the company doesn’t boost its dividend, instead reinvesting in the business, it’s remained stable for well over a decade. That means you can look forward to dividend payments rather than cuts.
Furthermore, shares of this passive-income stock have grown a 228% over the last decade. While there are tech stocks at higher levels, this is a stable amount of growth that could be replicated in the near future. A 12.85% compound annual growth rate (CAGR) is one that could certainly happen year after year. With shares down 6% from all-time highs, it’s a great time to pick up the stock.
Blue chip all the way
The Big Six banks remain in undervalued territory, offering price-to-earnings levels that are quite remarkable — especially given their strong earnings reports. But of the batch, Bank of Montreal (TSX:BMO)(NYSE:BMO) looks like one of the best options.
BMO is a passive-income stock with a lot of growth underway. It’s partnered with French banks to continue an expansion in the United States. Meanwhile, it offers a 4.02% dividend yield that was recently boosted. And it trades at an insanely undervalued 7.55 times earnings.
The bank boosted its dividend by an incredible 25.87% back in February, and a further 4.51% due for August. Its grown that dividend at a compound annual growth rate (CAGR) of 6.63% over the last decade. During that time, shares have grown 137%, providing you with stable returns and dividends to boot.
An undervalued healthcare real estate stock
I’m shocked that NorthWest Healthcare Properties REIT (TSX:NWH.UN) is still so undervalued. The healthcare real estate investment trust (REIT) is a solid long-term hold, investing in the healthcare industry around the world. And that world now includes the United States within its portfolio.
While there are other REITs that offer growth, NorthWest is completely stable thanks to a diverse portfolio both globally and through different healthcare properties. And yet it continues to trade at just 6.5 times earnings.
Shares are now down 10% from 52-week highs, and you can lock in a dividend yield of 6.12% at these ultra-low levels. Again, dividends haven’t increased that much over the last decade but have remained as stable payments for investors. All while shares are up 19% in the last five years.
