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The market is rebounding after a pointy correction, however many prime Canadian dividend shares nonetheless commerce at low-cost costs. Buyers with a contrarian investing technique are questioning which TSX shares could be undervalued and good to purchase proper now.
Financial institution of Montreal
Financial institution of Montreal (TSX:BMO) has raised its dividend twice previously yr, first growing the payout by 25% after which by one other 4.5%. This is able to recommend the administration group isn’t overly involved in regards to the potential impression of a recession in 2023 or 2024.
Financial institution of Montreal constructed up extra money through the pandemic and is utilizing portion of the funds to make a strategic acquisition to drive future progress. The acquisition of Financial institution of the West for US$16.3 billion will add greater than 500 branches to the American operations.
Financial institution of Montreal trades for near $132 per share on the time of writing in comparison with greater than $150 on the 2022 peak. Buyers who purchase on the present worth can get a 4.2% dividend yield.
Telus
Telus (TSX:T) ought to be inventory to purchase if you’re apprehensive that an financial downturn might arrive subsequent yr and be extra extreme than predicted. The corporate’s cellular, web, and safety companies are deemed important by most clients. As such, the income streams from these traces of enterprise ought to maintain up nicely throughout a recession.
Telus just lately reported robust third-quarter (Q3) outcomes, and traders ought to see stable dividend progress of 7-10% in 2023. The corporate is winding up its copper-to-fibre transition this yr. That’s anticipated to cut back capital outlays by about $1 billion. This implies additional cash stream ought to be out there for dividend will increase or share buybacks.
Telus inventory trades for near $29 per share on the time of writing in comparison with greater than $34 earlier this yr. Buyers who purchase on the present worth can get a 4.9% dividend yield.
Solar Life
Solar Life (TSX:SLF) operates insurance coverage, wealth administration, and asset administration companies primarily positioned in Canada, the USA, and Asia. Earnings have taken successful in 2022 because of increased insurance coverage claims as a consequence of COVID-19 and decrease charges within the wealth administration phase attributable to weak fairness markets. These are short-term points that shouldn’t impression the long-term alternatives for progress.
An increasing center class in India and the opposite Asian nations the place Solar Life has a robust presence ought to drive increased demand for insurance coverage and funding merchandise within the coming years. Solar Life also needs to profit from the sharp rise in rates of interest in Canada and the USA, as will probably be in a position to earn higher returns on the money it has to put aside to cowl potential insurance coverage claims.
Solar Life trades close to $62 per share on the time of writing in comparison with $74 in early 2022. The dividend at present offers a 4.6% yield.
The underside line on low-cost shares to purchase now
Financial institution of Montreal, Telus, and Solar Life pay engaging dividends that ought to proceed to develop. When you have some money to place to work in a retirement portfolio, these shares seem low-cost proper now and should be in your radar.
