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Forbes
2 days ago
- Business
- Forbes
These Dirt Cheap Dividends Pay 4x-9x The Market
The market-at-large is expensive by historical metrics. So let's look past the pricey, low-yielding ETFs in favor of cheap dividends. That's right, good ol' value investing bargains. With high yields too! We're talking about divvies of 5%, 8% and even 11% that we'll discuss in a moment. The spring market dip sure was brief, wasn't it? The S&P 500 sank into near-bear territory in roughly a month, then snapped back just as quick. In doing so, Mr. and Ms. Market took valuations to high levels. The S&P 500's forward price-to-earnings (P/E) ratio of 22.1 remains in rarefied air, last reached during the COVID rebound, and before that, the dot-com bubble. Which is fine. We'll leave the 22 P/Es to the vanilla investors while we focus on bargains with respect to two 'cash is king' metrics: Cheap Dividends #1: AES Corp. Let's start with Virginia-based electric utility AES Corp. (AES, 5.5% yield), which we recently discussed as a low-beta name. This means AES, being a safe, stodgy utility, is more insulated from market pullbacks than run-of-the-mill dividends. AES also has upside potential. Its renewable energy-selling business gives it growth potential that many utility stocks don't have. It's also cheap. AES trades at a cheap 5 times cash-flow estimates, as well as a 0.6 PEG that implies it's also cheap compared to its growth estimates. (Remember: A PEG under 1.0 signals that a stock is inexpensive.) The stock yields more than 5%, to boot, which is better than the already generous utility sector. Cheap Dividends #2: Edison International Edison International (EIX, 5.9%) is another utility company—this one more typical of the sector. It's the parent of regulated utility Southern California Edison (SCE), which serves more than 15 million customers and generates much of its electricity from renewable sources including solar, wind, and hydro. It does, however, have a second business—Trio (formerly Edison Energy), a global energy advisory firm that serves large commercial, industrial and institutional organizations. Unlike other utilities, however, EIX is a bit more 'exciting.' It spent years in court fighting litigation over wildfire damage and ended up having to pay multiple billion-dollar-plus settlements. And the legal drama has returned in 2025. Shares have lost more than a quarter of their value, with most of that coming in January amid Los Angeles County wildfires, including the massive Eaton Fire, which prompted multiple suits against SCE over allegations that the company had 'violated public safety and utility codes and was negligent in its handling of power safety shut-offs.' SCE is also being investigated in connection with the Hurst Fire. If, for a minute, we closed our eyes and ignored all that, there's a lot to like about Edison. It's expected to generate decent top-line growth and a significant snap-back in profits over the next couple years. The big drop in shares has launched EIX's yield to nearly 6%. It trades at just 3 times cash-flow estimates. And its PEG, which at fractionally under 1 suggests the stock is only mildly underpriced, is substantially down from the nearly 3 it traded at when I evaluated the stock a couple years ago. But we can't ignore the fire liabilities—they're why EIX's valuations are so low. That makes Edison a much bigger high-risk, high-reward gamble than the average utility. Cheap Dividends #3: Amcor Amcor (AMCR, 5.2% yield) is technically a cyclical stock, but it acts defensively. That's because, as a packaging specialist, it's in the business of—well, other business's business. It makes everything from high-barrier paperboard trays for beef and meats to glass dressing bottles to overwrap for home and personal care. And its applications go far beyond the grocery store: Amcor's products are used in garden and outdoor products, agriculture, pet care, healthcare, even building and construction. So Amcor is simultaneously a play on the broader economy and all the businesses it supports, but it also fills a vital need across a diversified set of companies. AMCR stands out for a few reasons: Cheap Dividends #4: Kodiak Gas Services Kodiak Gas Services (KGS, 5.2% yield) is an energy services firm that provides natural gas compression services, mostly in the Permian Basin of Texas and New Mexico. Its compression units are critical to upstream and midstream natural gas firms, so it's able to secure multiyear, fixed-revenue contracts. There's nothing novel about the business model, though. Like other energy services firms, if natural gas/liquefied natural gas (LNG) is in demand, Kodiak will be in demand, so the fact that global LNG demand is expected to grow over the next few years bodes well for KGS. That's in large part because Kodiak is extremely well-positioned to capture that growth. In late 2023, KGS announced it would acquire CSI Compressco LP to create the industry's largest compression fleet. Kodiak's fleet is young, too (read: less maintenance and replacement costs). There's not much stock history to examine, however. Kodiak is a relatively new issue that went public just a few months before the CSI announcement. But the company has started a dividend and raised it twice since then, including a nearly 10% improvement announced in April 2025. Meanwhile, its yield has wafted up to over 5% amid energy's weakness this year—and left shares relatively cheap. KGS trades at roughly 6 times cash flow estimates and a low PEG of 0.13. Cheap Dividends #5: Atlas Energy Solutions Atlas Energy Solutions (AESI, 8.4% yield) is another Permian Basin energy equipment and services firm, this one providing transportation and logistics, storage solutions, and contract labor services to oil and natural gas E&P firms, as well as other oilfield services companies. Its most important offering is mesh frac sand used in hydraulic fracturing (fracking). I had been keeping tabs on it because of its unorthodox streak of dividend hikes, but that streak stopped earlier this year. It's not ideal. Nor is the fact that AESI shares have been hammered to the tune of 45% this year. Again, energy services haven't had a great 2025, but Atlas has been downright miserable amid slower-than-expected U.S. completion activity and droopy frac-sand prices. If there's any silver lining to that, it's that AESI shares now trade at just 5.7 times estimates for cash flows, as well as an attractive PEG of 0.75. The dividend at least appears to be safe, too. While things look bad from an adjusted earnings perspective ($1.00 in dividends annually vs. forecasts for just 25 cents this year), Atlas has more than enough FCF to cover the payout. Example: Last quarter, it generated $48.9 million in adjusted FCF while paying out $30.9 million. Those cash flows are substantial because AESI is a low-cost operator—crucial for survival in this industry. But like any energy services provider, Atlas needs commodity prices to cooperate. Cheap Dividends #6: UPS It's unusual for a blue-chip stock like United Parcel Service (UPS, 7.5%) to yield north of 7%, but it's also rare for a blue-chip stock like UPS to have its shares hemorrhage so much without a recession or broader bear market. Lower-margin e-commerce volumes, higher costs because of its unionized workforce, and a weak freight environment hampered the company in 2024. Then in early 2025, it spooked investors with a weak 2025 forecast and announced that—in hopes of shifting away from those lower-margin volumes—it would drastically reduce its business with Amazon (AMZN), which accounted for roughly 10%-12% of annual UPS revenues. The April tariff announcement also hit shares hard. The result? UPS shares have lost nearly half of their value in just two years. The upshot? UPS trades at roughly 8 times cash-flow estimates and has never offered a better yield in its 26 years of trading. Is UPS a dividend trap? Perhaps. The company pulled its full-year revenue and profit forecasts in April, and didn't bring them back in its late July report. Meanwhile, Wall Street is expecting a roughly 15% drop in adjusted earnings, to $6.61 per share. That specific number matters: UPS has a target dividend payout ratio of approximately 50% of prior-year adjusted EPS. It currently pays $6.56 across four quarterly dividends. (That's 99%!) CEO Carol Tomé continued to signal commitment to the dividend in the earnings call—'UPS is rock-solid strong and so is our dividend. The UPS dividend is backed by solid free cash flow and a strong investment-grade balance sheet,' she said—but if the delivery giant continues to struggle, simple numbers might force management's hand. Cheap Dividends #7: Western Union Western Union (WU, 11.3% yield), somehow, is still in business. Payment apps like PayPal, Venmo and Zelle have been taking business from the 'OG' of money transfer. WU boasts a big yield but for the wrong reason—its divvie looks big because shares are (deservedly) way down! WU, to its credit, has launched an initiative called 'Evolve 2025' in which it's rolling out new products, improvements and an operational efficiency program. It's also expanding its digital wallet offerings in Mexico and Singapore. And its latest move, announced just a couple days ago, is the $500 million acquisition of Miami-based International Money Express (IMXI), aka Intermex, which serves some 6 million customers who send money from the United States, Canada, Spain, Italy, the United Kingdom, and Germany to more than 60 countries. But c'mon man—this dog is dead. The business trades for 4x cash flow and a sub-5 forward P/E, but who cares? Not me. Brett Owens is Chief Investment Strategist for Contrarian Outlook. For more great income ideas, get your free copy his latest special report: How to Live off Huge Monthly Dividends (up to 8.7%) — Practically Forever. Disclosure: none
CNA
7 days ago
- Business
- CNA
Trading platform eToro's CEO highlights retail investor surge as profit beats estimates
Stock and crypto trading platform eToro's CEO said on Tuesday that retail investors seized opportunities to buy stocks during the April market dip caused by tariffs, after the fintech firm exceeded second-quarter profit estimates. Markets saw sharp swings after U.S. President Donald Trump announced new tariffs early in the quarter, yet analysts observed that individual investors were not deterred by the volatility and quickly sought opportunities to "buy the dip." "We saw a lot of our retail investors jumping in to scoop opportunities with Google, Nvidia and Tesla," eToro CEO Yoni Assia said in an interview with Reuters, referring to the sharp slide in high-growth big tech stocks following April's tariff announcements. "This reminds us of what we've seen in COVID, where institutional investors are pulling out of the markets and retail investors are taking that opportunity and investing." Trading in stocks has since normalized, executives said, sending the company's shares down 8 per cent. Analysts said the stock's slide reflected high expectations ahead of the results. The company went public in May in a bumper U.S. initial public offering, with shares surging on their debut after pricing above the marketed range. "Today's initial eToro excitement gave way to a touch of disappointment," said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors. "Management admitted the April tariff‑shock uptick in trading activity faded by July, so the beat didn't come with a sustainably higher run‑rate." CRYPTO OPPORTUNITIES Financial technology companies have been expanding their crypto product portfolios as regulatory clarity emerges in the key U.S. market under the Trump administration. EToro said crypto activity strengthened in July as bitcoin reached all-time highs, propelling several other tokens. New-age fintech platforms have taken market share from established Wall Street firms by luring younger, tech-savvy investors. "Regulators all around the world are also looking at what regulators in the U.S. are doing and saying," Assia said. "They're providing very sort of clear messaging, which is, crypto is here to stay." He added that the company will eventually cater to more sophisticated users as its product expansion, including AI strategies, gathers pace, moving beyond its core retail trading roots. Founded in 2007, eToro operates a trading platform that allows users to invest in stocks, cryptocurrencies and other assets while mirroring the strategies of top investors.
Yahoo
15-07-2025
- Business
- Yahoo
Buy the Dip: 3 Canadian Stocks to Buy Now, Even if the Markets Drop
Written by Amy Legate-Wolfe at The Motley Fool Canada When markets dip, smart investors don't panic. They look for value. That's why a $14,000 Tax-Free Savings Account (TFSA) could benefit from buying strong Canadian stocks on the dip. Three names stand out: Bank of Nova Scotia (TSX:BNS), Cenovus Energy (TSX:CVE), and Lundin Mining (TSX:LUN). Each operates in a cyclical sector, but each brings unique stability, income, and upside if the market rebounds. The Bank of Nova Scotia is Canada's third-largest bank. Its second-quarter results showed net income of $2.032 billion, slightly down from $2.092 billion a year ago. Basic earnings per share (EPS) were $1.48, versus $1.57 previously, and return on equity dropped to 10.1% from 11.2%. Revenue rose by 9% to about $9.1 billion. The bank increased provisions for loan losses by $1.40 billion due to tariffs and economic worries. That weighed on the Canadian banking unit, which saw income fall by 31%. Despite this, its diversified global operations and solid fee income from wealth management help balance the drag. The dividend yield remains near 5.8%, offering reliable income from a blue-chip Canadian bank. Bank stocks typically recover after market dips. Scotiabank looks strong enough to return to its historical path once loan loss provisions ease. The bank also sold some overseas assets to focus on North America, especially U.S. regional banking through its stake in KeyCorp. While short-term pressures exist, the long-term view remains intact. Cenovus Energy is the next pick. It posted $13.3 billion in revenue for the first quarter of 2025, and net income came in at $859 million, down from $1.18 billion year-over-year, but still beating expectations at $0.47 per share. Operating cash flow reached $1.3 billion, with $2.2 billion in adjusted funds flow and nearly $1 billion in free funds flow. Cenovus also increased its dividend by 11% to $0.80 annually. That reflects strong cash generation, especially from upstream production of 818,900 barrels of oil equivalent per day. Cenovus offers around a 4.3% yield at writing, and benefits from pipeline expansions like Trans Mountain, which reduces transportation costs. Falling oil prices did pull income down, but production remains high and resilient. The Canadian stock sells at a discount during economic worries, making it a classic dip buy for income and value. Finally, Lundin Mining offers exposure to metals that power modern infrastructure. In Q1 2025, the Canadian stock raked in US$963.9 million in revenue. Lundin Mining reported net earnings from continuing operations of US$138.1 million in Q1 2025, versus US$38.3 million in Q1 2024. That turnaround reflects higher copper output of 77,000 tonnes, alongside solid gold and nickel production. Its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) stood at US$388 million and operating cash flow at US$337 million. Free cash flow was US$21.6 million. The Canadian stock recently sold its European assets to focus on growth opportunities like the Vicuña copper-gold project with BHP. Guidance remains firm, with targets for strong production and cash flow this year. Lundin also initiated share buybacks and some dividends. While its yield is modest, around 0.77%, the growth potential in copper and gold gives it upside in a global demand recovery. So how do they fit into a dip-buy strategy? A TFSA investment split evenly among these three names of $4,666 each offers diversification across banking, energy, and mining. Scotiabank brings income and stability. Cenovus delivers cash flow and a rising dividend tied to energy trends. Lundin offers exposure to metal demand and earnings growth. Each has cyclical exposure but also stabilizing factors. Scotiabank's global presence and diversified income cushion macro shocks. Cenovus has cash in the bank and pipeline cost advantages. Lundin has solid production and strategic assets under management. Of course, none are without risk. Banks face loan-loss uncertainty and economic slowdown. Energy depends on volatile prices and environmental policies. Mining rides commodity cycles and execution risk on projects. But buying into these solid businesses when the market is shaky offers a chance to lock in value. Buying the dip isn't about gambling; it's about choosing strong, cash-generating companies and trusting that markets will bounce. In a TFSA designed for resilience and growth, BNS, CVE, and LUN offer income, value, and future potential. As markets fall, these names could rise again, just as they have many times before. The post Buy the Dip: 3 Canadian Stocks to Buy Now, Even if the Markets Drop appeared first on The Motley Fool Canada. Before you buy stock in Bank of Nova Scotia, 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 Bank of Nova Scotia 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 $24,927.94!* 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 30 percentage points since 2013*. See the Top Stocks * Returns as of 6/23/25 More reading 10 Stocks Every Canadian Should Own in 2025 [PREMIUM PICKS] Market Volatility Toolkit A Commonsense Cash Back Credit Card We Love Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Bank of Nova Scotia. The Motley Fool has a disclosure policy. 2025 Sign in to access your portfolio
