TFSA Investors: 3 Undervalued Dividend Stocks That Are Trading Near Their 52-Week Lows

RioCan Real Estate Investment Trust (TSX:REI.UN) and these two other dividend stocks yield more than 4% and could also provide investors with strong returns this year.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn moresdf

Stocks that are trading near their 52-week lows could present investors with a great opportunity to buy low, and with a dividend stock, you can also lock in a higher yield. The risk is that the stock could continue to go lower, but the three stocks below are good value buys that could have a lot of upside and are able to provide investors with strong returns this year.

RioCan Real Estate Investment Trust (TSX:REI.UN) has been down more than 6% in the past year, pushing its dividend yield up to a little less than 6%. With monthly payouts, RioCan offers you a good source of consistent cash flow, while also giving you an opportunity to take advantage of a low price that currently sees the stock trading only slightly higher than its 52-week low.

One reason why RioCan is a good buy at its current price is that over the past year it has typically seen strong support at $24, and investors that can get the stock around this price will be in a good position to maximize their returns.

The company has also provided investors with a great deal of stability, as revenues have been north of $280 million in each of the past five quarters, while generating a profit margin of more than 60%. RioCan is also taking an innovative approach that will change the way shopping centres look and make them less dependent on retailers to fill voids, which will help to minimize risk.

TransCanada Corporation (TSX:TRP)(NYSE:TRP) has seen a big sell-off recently, as the share price has dropped more than 7% in just the past month, and since August it is down more than 12%. Despite progress being made with the Keystone XL and securing a great deal of demand for the pipeline, investors have been very hesitant to invest in TransCanada.

The stock is coming off a new 52-week low, and with the Relative Strength Index dropping to below 30, which indicates a stock has been oversold, signs point to this recent sell-off being an overreaction. Investors are still likely bearish about oil and gas stocks, as many have failed to gain much momentum, if any, despite the recent surge we’ve seen in the price of oil.

The drop in share price has pushed TransCanada’s dividend up to 4.4%, and it’s a great opportunity for investors to secure a strong, stable payout.

Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR) has dropped 7% in the past month after a disappointing quarter for the telecom company sent investors into selling mode. It also didn’t help that Corus Entertainment Inc. (TSX:CJR.B), which Shaw has a big interest in, had an even bigger sell-off after advertising revenues were soft and concerns about cord cutting were renewed.

The drop in share price hasn’t yet resulted in a new 52-week low, but the stock is only barely above that level to start February. As a result of the decline in price, the dividend has risen to 4.4%. There is also a lot of potential upside for the stock as during the past year the share price has generally seen strong support at ~$27.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor David Jagielski owns shares of RIOCAN REAL EST UN.

More on Dividend Stocks

growing plant shoots on stacked coins
Dividend Stocks

5 Dividend Stocks to Buy With Yields Upwards of 5%

These five companies all earn tonnes of cash flow, making them some of the best long-term dividend stocks you can…

Read more »

funds, money, nest egg
Dividend Stocks

TFSA Investors: 3 Stocks to Start Building an Influx of Passive Income

A TFSA is the ideal registered account for passive income, as it doesn't weigh down your tax bill, and any…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 of the Safest Dividend Stocks in Canada

Royal Bank of Canada stock is one of the safest TSX dividend stocks to buy. So is CT REIT and…

Read more »

Growing plant shoots on coins
Dividend Stocks

1 of the Top Canadian Growth Stocks to Buy in February 2023

Many top Canadian growth stocks represent strong underlying businesses, healthy financials, and organic growth opportunities.

Read more »

stock research, analyze data
Dividend Stocks

Wherever the Market Goes, I’m Buying These 3 TSX Stocks

Here are three TSX stocks that could outperform irrespective of the market direction.

Read more »

woman data analyze
Dividend Stocks

1 Oversold Dividend Stock (Yielding 6.5%) to Buy This Month

Here's why SmartCentres REIT (TSX:SRU.UN) is one top dividend stock that long-term investors should consider in this current market.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Better TFSA Buy: Enbridge Stock or Bank of Nova Scotia

Enbridge and Bank of Nova Scotia offer high yields for TFSA investors seeking passive income. Is one stock now undervalued?

Read more »

Golden crown on a red velvet background
Dividend Stocks

2 Top Stocks Just Became Canadian Dividend Aristocrats

These two top Canadian Dividend Aristocrats stocks are reliable companies with impressive long-term growth potential.

Read more »