Written by Rajiv Nanjapla at The Motley Fool Canada
The Bank of Canada has cut its benchmark interest rate twice this year, and analysts expect another cut this year. With interest rates falling, dividend stocks have become an attractive way to earn a stable passive income. With that in mind, let’s look at three cheap dividend stocks that can boost your passive income.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is an oil and natural gas producer with assets in Western Canada, the North Sea and offshore Africa. Its high-quality reserves and diversified assets have generated stable and predictable cash flows, allowing the Company to increase its dividends by 21% annually for 24 consecutive years. It currently pays a quarterly dividend of $0.525 per share, with an expected dividend yield of 4.2%.
With oil prices having declined significantly from their April highs, CNQ has lost 11.7% of its share value compared to its 52-week high. The decline has dragged down its valuation, with the company currently trading at a forward price-to-earnings ratio (Next 12 Months) of 12.7. In addition, the International Energy Agency forecasts that oil demand will increase by 3.2 million barrels per day compared to its level in 2023, barring any significant policy changes. Rising oil demand could support high oil prices.
In addition, CNQ has planned to invest $5.4 billion this year to increase its production. Increased production and higher oil prices could boost its finances. Additionally, with the company’s debt falling below its $10 billion target, the company expects to return 100% of its free cash flow to shareholders, making its future dividend payouts more secure.
Nordland Power
Second on my list would be Nordland Power (TSX:NPI), which builds, owns and operates clean energy assets in Asia, Europe and the Americas. Earlier this month, the company reported a strong second-quarter performance, with revenue and adjusted EBITDA increasing 12.1% and 15.5%, respectively. Increased wind resources more than offset the decline in revenue from its Canadian solar assets, boosting its financials.
In the meantime, NPI continues to build its two offshore projects in Taiwan and Poland, as well as an energy storage project in Canada. Management expects to complete these projects in the next few years. As part of these development projects, management expects its adjusted EBITDA to grow 7-10% annually through 2027. In addition, the company is pursuing additional opportunities with a total development pipeline of 9 gigawatts. Given the healthy long-term growth prospects, I believe NPI’s future dividend payouts are more secure.
NPI currently pays a monthly dividend of $0.10 per share and has a forward yield of 5.4%. The valuation of NPI stock also appears attractive: the NTM P/E ratio is 14.3.
NorthWest Healthcare Properties REIT
My final choice would be NorthWest Healthcare Properties REIT (TSX:NWH.UN), which operates 186 healthcare properties in seven countries. The Company enjoys strong occupancy and move-in rates thanks to its long-term leases with government-supported tenants. In addition, the Company recently sold its United Kingdom portfolio for $885 million, completing its previously announced strategic review process.
Since initiating its non-core asset sales program, the company has sold approximately $1.4 billion of non-core assets and used the net proceeds from these sales to reduce its debt. In addition, the REIT has planned to develop next-generation assets that could create long-term earnings growth so that it can continue to reward its shareholders with healthy dividends. NWH.UN currently pays a monthly dividend of $0.03 per share, with the expected yield being 7.5%. The valuation also looks attractive, with a price-to-book ratio of 0.7.
The post 3 Cheap Dividend Stocks to Boost Your Passive Income first appeared on The Motley Fool Canada.
Before you buy Canadian Natural Resources shares, consider the following:
The Motley Fool Stock Advisor Canada The analyst team has just published what they believe to be The 10 best stocks for investors to buy now… and Canadian Natural Resources wasn’t one of them. The 10 stocks that made the cut have the potential to deliver huge returns in the years to come.
Consider MercadoLibrewhich we first recommended on January 8, 2014 … if you had invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you would have 19,641.05 USD!*
Stock Advisor Canada offers investors an easy-to-follow plan for success, including guidance on building a portfolio, regular updates from analysts, and two new stock recommendations per month – one from Canada and one from the United States. Stock Advisor Canada The service has outperformed the S&P/TSX Composite Index by 30 percentage points since 2013*.
Check out the 10 stocks * Returns from 14.08.24
Further reading
Fool contributor Rajiv Nanjapla does not own any stocks mentioned. The Motley Fool recommends Canadian Natural Resources. The Motley Fool has a disclosure policy.
2024
