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3 days ago
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Why I'd Include These 3 Essential Canadian Dividend Stocks in My TFSA
Written by Puja Tayal at The Motley Fool Canada The geopolitical uncertainty, rising inflation, and slowing business investments have made many investors take a step back and hold cash. Such uncertainty makes you question what will happen next and seek solace in hard cash. But it is also true that in hard times, one derives true value. Most stocks are directly affected by economic growth, but essential goods and services are resilient to the economic environment. When the going gets tough, these essential goods and services become a defensive play and outperform the market. They can give assured dividends in times of crisis and preserve your portfolio value. If you want extra income for tough times, consider investing through your Tax-Free Savings Account (TFSA), as it allows tax-free withdrawals. You don't want a high tax bill while you are struggling with higher prices. Coming back to the essential stocks that can give you a side income in times of need. The TSX is home to some of the strongest dividend stocks. In this digital age, the internet is no less than a utility. Among the Canadian telcos, Telus International (TSX:T) has the highest dividend yield of 7.6% and the benefit of scale to thrive in the crisis. The company has increased its 2025 dividend by 7%. However, it will likely slow the dividend growth rate from next year as the management guides 3–8% dividend growth in the 2026–2028 period. This move comes as Telus adjusts to competitive pricing, reduces balance sheet debt, and restructures its business. A slower dividend growth rate will help Telus sustain the payouts even in a crisis. Now is a good time to buy the dip and lock in a 7.5% yield. A $10,000 investment now can buy you 455 shares, which will give an annual dividend of $760. You might think of Canadian Tire (TSX:CTC.A) as a discretionary retailer. However, in the current market, where people can't afford to buy cars and spend much on ski trips, Canadian Tire could outperform. The retailer sells auto parts, outdoor, leisure, and seasonal goods, along with discretionary goods like sports (SportChek) and apparel (Mark's). The retailer is looking to boost discretionary sales with its True North growth strategy. The strategy aims to increase its return on invested capital by focusing sales efforts on existing clients through loyalty points and data-driven sales pitches. These efforts could increase profits faster than sales if the outcome is as desired. Canadian Tire stock has already jumped 26% from its April low and is trading closer to its 52-week high. You can still lock in a 4% yield and expect the retailer to grow dividends annually, as it has in 21 out of the last 22 years. A $10,000 investment now can buy you 56 shares, which will give an annual dividend of $397.60. Enbridge (TSX:ENB) is an evergreen dividend stock. It is in Canada's most lucrative business – energy exports. Its oil and gas pipeline network facilitates the export of oil from Canada to the United States. The tariff wars created panic among investors around export volumes, but a negotiation could drive Enbridge's stock prices. Now is a good time to buy the stock and lock in a 6% dividend yield. The company will grow its dividend by 3% in 2026 and increase the growth rate to 5% beyond that. Supporting this growth will be new gas pipelines that come online and the reduction in debt levels, which increased after acquiring three U.S. gas utilities. A $10,000 investment now can buy you 159 shares, which will give an annual dividend of $599. Stock Stock Price Number of shares Dividend Per Share Total Dividend amount Dividend Yield Telus International $22.00 455 $1.67 $759.85 7.45% Canadian Tire $177.28 56 $7.10 $397.60 4.00% Enbridge $62.70 159 $3.77 $599.43 6.00% If you invest $10,000 in each of the three stocks now, you can get an annual dividend of $1,757 if these companies sustain their dividend per share. The three companies' fundamentals show that they can sustain and grow dividends for years to come. The post Why I'd Include These 3 Essential Canadian Dividend Stocks in My TFSA appeared first on The Motley Fool Canada. More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and TELUS. The Motley Fool has a disclosure policy. 2025 Sign in to access your portfolio
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3 days ago
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How I'd Allocate $50,000 in Retirement Stocks in Today's Market
Written by Puja Tayal at The Motley Fool Canada The tariff war has been the theme of 2025. Developments on the tariff front are driving the markets. Recently, the stock market surged on signs of optimism as Canada's Prime Minister is in constant communication with the U.S. President over lifting tariffs. The TSX Composite Index neared its record high, recovering 17% from the April dip when retaliatory tariffs were paused. This volatility presents an opportunity as well as a threat for retirees. If you are considering allocating your retirement money to term deposits, the Bank of Canada is slashing interest rates, which could erode the purchasing power of your retirement fund. The key to mitigating risk is diversification. Consider diversifying your money across sectors and asset classes that are uncorrelated. To give you an example, factors such as interest rates, economic growth, and house prices, which affect the real estate sector, do not affect the technology sector. Consider holding one stock from each sector. CT REIT (TSX: buys, maintains, intensifies, and develops Canadian Tire stores. The retailer occupies 92.8% of the REIT's leased area and contributes 91.8% to the base minimum rent. While the REIT's performance is linked to that of the retailer, the impact is only felt when there is a significant change. Canadian Tire is carrying out its True North growth strategy, in which it will open more than 30 Canadian Tire and 18 Mark's stores. CT REIT may get the first choice to carry out the store intensification and development, but the pace will continue to be slow as it has been for the last few quarters. Nevertheless, the rent from existing stores will continue. In the first quarter, CT REIT's net income jumped 4.5%, and adjusted funds from operations jumped 4.7% as it realized higher rent from the intensification projects it completed last year. This helped the REIT lower its dividend payout ratio to 72.2% from 73.1% a year ago. The REIT increased distributions by 3.3%, passing on the higher income to unitholders. You can invest $10,000 in this stock, buy 618 units, and get $48.8 per month in payouts at a $0.07903 monthly distribution per unit. This amount could grow annually by 3% for decades while your $10,000 remains intact, or grow by 5–10% as CT REIT's unit price increases. You could allocate another $10,000 to a resilient growth stock, Constellation Software (TSX:CSU), to increase your portfolio value. While this amount may only buy you two shares, it could double your money in five years. The market volatility has pulled down some stock prices, creating an opportunity for Constellation to buy small vertical-specific software companies at a discount. Most of Constellation's acquisitions have sticky and recurring cash flows from maintenance contracts. In the short term, its revenue and free cash flow growth may slow amid weak economic activity. However, growth may accelerate next year as Constellation consolidates the earnings of acquired companies. The stock made an all-time high of $5,300 in May and has dipped 7.7% since then. Now is a good time to buy and hold the stock. Constellation's enterprise value will increase as more companies are added to its earnings, and consequently, its share price will also rise. You can allocate the remaining $30,000 to stocks that benefit from high inflation, as you will buy their products regardless of the price. This includes grocery and natural gas, used for heating, vehicles, and cooking. Loblaw (TSX:L) stock has significantly outperformed some of the high-growth tech stocks, surging 236% in the last five years. It is a buy even though the stock is trading near its all-time high, as there is more upside. Loblaw runs supermarkets, pharmacies, and apparel stores. High inflation could shift demand from high-ticket items to essentials, and Loblaw will benefit from increased volumes. Whereas the opposite happens in a strong economy, when Loblaw benefits from higher profit margins, helping your portfolio fight inflation. Canadian Natural Resources can also help fight inflation with its 5.3% dividend yield, which is growing at an average annual rate of over 20%. The post How I'd Allocate $50,000 in Retirement Stocks in Today's Market appeared first on The Motley Fool Canada. More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources and Constellation Software. The Motley Fool has a disclosure policy. 2025
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3 days ago
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Where I'd Find Value in Canadian Stocks for My Long-Term Holdings
Written by Puja Tayal at The Motley Fool Canada Spending time in the market can generate wealth if invested in the right stocks. But how to find stocks that can thrive in the long term? Investing in stocks is investing in a business, and businesses have ups and downs. If you put yourself in the business owner's shoes and see the economic, political, regulatory, and industrial environment and the management's approach, you can get a fair idea of which business will be the wealth generator. A business is as good as its management. If they are distorted from reality, then it is a stock to steer clear of. However, management that accepts the headwinds, cuts outlook if needed, and makes difficult choices to sustain in crisis could provide value in the long term. One such example is Bombardier (TSX:BBD.B). Its management made some difficult choices of downsizing from several businesses of passenger planes and trains to just business jets. Four years of focused efforts in business jets and aftermarket services pulled the company from a turnaround stock to a growth stock, and if things go as planned, even a dividend stock in the future. Before the first-quarter earnings, Bombardier CEO Eric Martel expressed concerns about tariff wars affecting jet deliveries and refused to give guidance until there was clarity. Once the United States imposed tariffs on Canada in March and Bombardier's products were exempted from tariffs, the company gave strong guidance. In its 2025 guidance, Bombardier's focus is on improving profitability. It expects revenue to grow by 6.7% and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by 14%. It also expects its free cash flow to more than double to US$500 million in the lower range of its guidance. Particulars 2024 Results (US$) 2025 Guidance (US$) Aircraft deliveries (in units) 146 >150 Revenues $8.67 billion >$9.25 billion Adjusted EBITDA $1.36 billion >$1.55 billion Free cash flow $232 million $500 million – $800 million The business jet maker looks to derive value from its business jets by modifying them for defence and selling pre-owned aircraft. It has already monetized the maintenance and aftermarket service of its business jets in the air and will look for targeted acquisitions to expand this business. The management's strong execution of its plans makes it a value stock even at a $100 share price if you hold it for the long term. The last five-year turnaround drove the stock price up 700%. The next five years could give strong double-digit growth and even marginal dividends. Descartes Systems (TSX::DSG) share price fell by 13% after the company released its first-quarter earnings. While the company reported strong double-digit revenue and adjusted EBITDA growth of 12% year over year, it gave a word of caution by announcing cost-reduction initiatives. Why would a company with a 45% adjusted EBITDA margin and a net cash position of $176.4 million (equivalent to its quarterly revenue) reduce costs? Descartes earns 67% of its revenue from the United States. Many of its customers are facing economic and global trade uncertainty, hinting at a slowdown or decline in revenue in the coming months as tariffs reduce trade activity. The company is slashing its workforce by 7% and expects operating cash flow to reduce in the second quarter as it undertakes restructuring. Descartes is taking these steps to preserve its profit margins. However, it is well positioned to tap the recovery in trade activity once the tariff war eases. Even if the tariffs bring structural changes in the supply chain, Descartes's solutions can help companies adapt to the change. The June dip has made Descartes a value stock to buy, and its secular growth has made it a stock to hold for the long term. The post Where I'd Find Value in Canadian Stocks for My Long-Term Holdings appeared first on The Motley Fool Canada. More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Descartes Systems Group. The Motley Fool has a disclosure policy. 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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4 days ago
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How I'd Allocate $10,000 Across These 3 Brilliant TSX Stocks for Growth and Income
Written by Puja Tayal at The Motley Fool Canada Investing in the stock market is not just about buying the dip and selling the rally. Knowing what you want from your money is crucial in determining which dips to buy. If you want to put $10,000 to work and help you get growth and income for the long term, you might have to choose two different stocks. However, there are a few stocks that can give you both. A good strategy could be to invest in three stocks – one for income, one for growth, and one for both. Starting with the stock that gives you income and even grows your money in the long term. The non-prime lender goeasy (TYSX:GSY) is a stock that has given regular quarterly dividends and even grown them by strong double digits in 10 out of the last 11 years. goeasy is in the business of giving unsecured and secured loans through easyfinancial and easyhome brands. Over the years, it expanded its business horizontally by Offering new loan products — point-of-sale financing and automotive loans — and ancillary services like creditor insurance and warranty coverage; Expanding its distribution channel; Expanding its Canadian presence; and Strengthening its underwriting model to give loans to more customers while controlling credit risk. All these efforts have helped the lender increase its loan portfolio over the years and grow its share price by 800% in the last 10 years, which is 10 times the 79% rally of the TSX Composite Index. goeasy stock also offers a 3.8% dividend yield from the interest earned on the loan portfolio. The yield might look small, but if you had held the stock for 10 years, the $0.5 dividend per share would have grown to $5.84. A $3,000 investment in goeasy in June 2015 would have bought you 154 shares, which are now worth $23,639, and have increased your annual dividend from $77 to $899. Now is a good time to buy and hold the stock, as high credit risk has pulled down the share price. It is trading at a forward price-to-earnings ratio of 8.71, below its five-year average of 10.76. Business jet maker Bombardier (TSX:BBD.B) is a growth-oriented stock that can give you double-digit capital appreciation. Although the management is considering paying dividends in the next two to three years as its free cash flow (FCF) stabilizes, meaningful returns will come from capital appreciation. Here's why. Bombardier's main business is selling business jets. The order book for business jets can fluctuate, which would be reflected in its share price. For instance, the company completed the flight test of its next-generation Global 8000 in May, hinting at a better product mix in the future. Moreover, the defence and pre-owned business jet verticals present opportunities to boost orders and grow the share price. As for dividends, the business jet maker could use its recurring revenue from after-market services. A $3,000 investment in Bombardier stock in June 2020 is now $23,000. This stock tends to rally in the second half as aircraft delivery volumes surge and free cash flow comes in. Although the stock has already jumped 32% from its April dip, there is more upside as the company secures orders for Global 8000. You have the growth, now comes the dividend. Many dividend stocks intend to help you generate passive income for your retirement. They offer dividend-reinvestment plans (DRIP) and even grow them annually to adjust for inflation. You can bank on them to pay dividends in every market condition, thereby complementing your pension. Telus (TSX:T) has a 21-year history of growing dividends. It offers DRIP to automate your retirement planning by accumulating dividend-paying shares. You can be assured about the dividends as Telus pays them using subscription money. The dividend-growth rate has slowed from 7-10% to 3-8% as competitive pricing and network sharing reduce its margins. However, it is working on monetizing its 5G network, which will help strengthen its balance sheet and FCF. This could help it grow dividends for years to come. You could consider investing $4,000 now while the stock trades closer to its 10-year low and lock in a 7.4% dividend yield. The post How I'd Allocate $10,000 Across These 3 Brilliant TSX Stocks for Growth and Income appeared first on The Motley Fool Canada. More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy. 2025 Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
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24-05-2025
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This 12% Yielding REIT Is Trading at its Lowest Valuation in Years
Written by Puja Tayal at The Motley Fool Canada The Canadian real estate market recovered partially. While retail REITs recovered completely, housing and commercial REITs have been struggling to recover. The overall recovery in the real estate sector is still lagging amid economic uncertainty. Amid this uncertainty, Allied Properties REIT (TSX: unit price fell to its July 2009 level and hasn't recovered since then. Why so? Allied Properties has 186 rental properties, of which 82% are office space, 12% retail, and 6% parking. The pandemic was disruptive for most commercial REITs as offices were closed. The work-from-home trend shrunk office space for many companies even after the pandemic. Many commercial REITs stopped giving distributions as the occupancy rate fell drastically. The accelerated hike in interest rates in 2022 forced many commercial REITs to even pause distributions so they could pay interest on loans. True North Commercial REIT even started selling properties to use the proceeds to repay debt. While Allied Properties faced similar issues of lower occupancy and rising debt, it continued to pay distributions. The REIT has identified 15 assets as held for sale. It aims to sell them for around $300 million and use the proceeds to reduce debt. Like all commercial REITs, Allied has a high indebtedness ratio of 42.9%, way above its target of less than 20%. The REIT has 12 properties, which are 53% vacant. It has been selling non-core assets and acquiring core assets to enhance its property portfolio. The reduction in fair market value (FMV) of its invested properties has been pulling down the net asset value (NAV) per unit. Its NAV fell 10.8% year-over-year to $39.99 in the first quarter of 2025. This has reduced its unit price by 67% to $15, at a price-to-book value of 0.39 times. The falling unit price has inflated the distribution yield as the REIT continued to pay distributions. At a time when other commercial REITs paused distributions, Allied Properties maintained its distributions, which shows its stability amidst the crisis. However, rising interest expense on the debt it took for 2024 acquisitions has reduced its adjusted funds from operations and increased its payout ratio to 96.4% in the first quarter of 2025. This ratio could be reduced if the REIT sells the $300 million worth of assets and reduces debt. So far, the 12% yield seems sustainable. However, there is a risk of delay in the sale of properties as a disruption of global trade is slowing decision-making for long-term leases. So, I won't rule out the possibility of a distribution cut if the debt doesn't reduce. Allied Properties REIT is trading at its lowest valuation in a decade, but there is a good reason for it. The economic slowdown from the trade disruption could delay recovery in commercial real estate. The REIT could withstand the slowdown till then. The unit price has already slipped to its lowest, reducing its downside. The REIT has never slashed dividends since its incorporation, which gives some assurance around the possibility of locking in a 12% yield. It is a high-risk stock but has the potential to give high returns. If the economy recovers and commercial real estate prices revive, the REIT could give you capital appreciation plus a 12% yield and a distribution that grows with inflation. However, the investor has to take the risk of a possible dividend cut and a lower unit price for two to three years. The post This 12% Yielding REIT Is Trading at its Lowest Valuation in Years appeared first on The Motley Fool Canada. Before you buy stock in Allied Properties Real Estate Investment Trust, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Allied Properties Real Estate Investment Trust wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $21,345.77!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*. See the Top Stocks * Returns as of 4/21/25 More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Puja Tayal 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. 2025
