Home Correction trading Top 3 Canadian Dividend Equities Trade at Attractive Valuations

Top 3 Canadian Dividend Equities Trade at Attractive Valuations


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Pending strong corporate earnings, the S & P / TSX Composite Index continued its uptrend and is currently trading 21.5% higher for this year. However, rising inflation and costly valuation are cause for concern. In September, Canada’s inflation rate hit 4.4%, an 18-year high. So, in this uncertain environment, it is prudent to bolster your portfolios with high quality dividend paying stocks. Meanwhile, the next three companies are paying dividends at a healthier rate and trading at attractive valuations.

TC Energy

TC Energy (TSX: TRP) (NYSE: TRP) is one of the reliable dividend paying stocks to have in your portfolio. It has grown its dividends at a compound annual growth rate (CAGR) of over 7% over the past 21 years. Its low-risk, regulated mid-level assets generate predictable cash flow, allowing the company to pay dividends at a healthier rate. Currently, the company’s forward yield is 5.15%.

Meanwhile, the company has seen a strong buy this year, with its share price rising more than 30%. Its strong performance in the second quarter and growing demand for oil supported its stock price growth. Despite the surge, the company is still trading below its pre-pandemic levels, providing a great buying opportunity. Its forward price-to-earnings and price-to-book ratios are 16.1 and 2.3, respectively.

Along with growing demand for oil from economic expansion, TC Energy’s $ 21 billion capital investment program and strong development pipeline could boost its finances and cash flow in the coming quarters. . Its management is optimistic about its future cash flow. Thus, management expects to increase its dividends by 5 to 7% per year over the next few years.

Algonquin Power & Utilities

Algonquin Power & Utilities (TSX: AQN) (NYSE: AQN) operates low risk utility assets and regulated renewable power generation facilities, which generate stable cash flow. Supported by this stable cash flow, the company has increased its dividends by more than 10% per year for the past 11 years, with a forward dividend yield of 4.54%.

Meanwhile, Algonquin Power & Utilities is looking to expand its utility and renewable assets by investing approximately $ 9.4 billion through 2025. Along with these investments, its acquisitions, strong underlying business and increased transition towards renewable or clean energies could improve its finances. Its financial position also appears healthy, with liquidity standing at $ 2.18 billion as of June 30. So I think the company’s dividends are safe.

However, Algonquin Power & Utilities has underperformed the broader equity markets this year, losing more than 8% of its stock value. The delay in passing the US infrastructure law appears to have weighed on its share price. Amid the correction, the company is trading at a futures price / earnings ratio of 19.1. Despite the short-term volatility, the company’s long-term growth outlook looks healthy.


My final choice would be AEC (TSX: BCE) (NYSE: BCE), one of the top three players in the Canadian telecommunications industry. With a significant percentage of its income coming from recurring sources, BCE’s cash flow is mostly predictable, which has enabled it to increase its dividends continuously since 2008. Currently, it pays a quarterly dividend of $ 0.875 per share, with a forward yield of 5.53%.

Amid the digitalization of business processes, the growth of e-commerce, and the increase in work and distance learning, the demand for faster and more reliable communication services is increasing. Thus, BCE is aggressively investing in the expansion of its high-speed and 5G Internet network across Canada in order to strengthen its competitive positioning. In addition, the company’s strong liquidity of $ 5.3 billion bodes well for its growth. The company is therefore well positioned to continue paying dividends at a healthier rate.

Despite its healthy growth outlook and high dividend yield, BCE is currently trading at an attractive futures price / earnings multiple of 19.5, which represents a great buying opportunity.

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