2 Unloved TSX Index Stocks to Buy Today
The Motley Fool
Published Mar 20, 2019 21:02
The recovery in the TSX Index since January has wiped out many of the great deals that were available at the start of the year, but some stocks still appear attractive.
Let’s take a look at Suncor Energy (TSX:SU)(NYSE:SU) and Enbridge (TSX:ENB)(NYSE:ENB) to see why they might be interesting picks for your portfolio right now.
Suncor Any mention of the Canadian energy sector pretty much sends investors running for the hills these days. Many have watched their former dividend darlings lose up to 90% of their values in the past five years, and the ongoing pipeline bottlenecks combined with volatile prices are good reason to give the patch a wide berth.
That said, some names in the sector have benefitted from the pain and Suncor is one of those companies.
Suncor is Canada’s largest integrated energy firm with production, refining and marketing divisions. The company entered the oil rout with a war chest of cash on the balance sheet and used the firepower to acquire strategic assets at attractive prices. It also took advantage of low construction costs to move ahead with two major developments that are now complete.
The board just gave investors a huge dividend increase and is buying back a big chunk of shares. This means management is comfortable with the cash flow outlook, even at current oil prices.
If oil can continue its recovery and settle in above US$70 per barrel, Suncor could move significantly higher.
At the current price, the stock appears cheap and investors can pick up a decent 3% yield.
Enbridge Enbridge was a $38 stock last April. Today investors are paying close to $49 per share and more gains could be on the way. In 2015, Enbridge topped $65.
The company has made good progress on an aggressive plan to simplify the corporate structure and improve the balance sheet. Enbridge found buyers for about 80% of the $10 billion in non-core assets it identified under a strategic review last year and is focusing its future investment activity on its regulated businesses.
The dividend increased 10% this year and is expected to jump another 10% in 2020. Beyond that timeframe, Enbridge is targeting growth in cash flow available for distributions of at least 5% per year, so the dividend hikes should continue at a steady rate.
The stock isn’t as cheap as it was last year, but still appears oversold and provides a dividend yield of 6%.
Get The App
The bottom line Suncor and Enbridge are leaders in the sectors and should be strong buy-and-hold picks for a dividend-focused portfolio today.
Fool contributor Andrew Walker owns shares on Enbridge. Enbridge is a recommendation of Stock Advisor Canada.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019
This Article Was First Published on The Motley Fool
Written By: The Motley Fool
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.