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Canadian stock markets are optimistic this year, with the S&P/TSX Composite Index increasing by 5.8%. Strong quarterly results and an improving macroeconomic environment with lower inflation have boosted investor confidence, boosting stock markets.
Despite the strengthening of broader stock markets, the following three dividend stocks still need to participate in the rally for several reasons. They are trading at significant discounts to their 52-week highs and their valuations look cheap, providing excellent buying opportunities.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX:PZA) owns and operates 743 restaurants under the Pizza Pizza and Pizza 73 brands. It has adopted a highly franchised business model, operating all of its restaurants through franchisees. It collects royalties from its franchisees based on sales. Therefore, your finances are immune to increased expenses in this inflationary environment. Meanwhile, revenue from the company's royalty fund could rise amid rising menu prices due to rising costs.
Additionally, PZA is focused on launching new products and leveraging its marketing and technology initiatives to drive sales. Since the beginning of this year, it has added 45 new restaurants to its royalty fund and eliminated 14 restaurants that have ended operations. It is building new restaurants and plans to increase its number of traditional restaurants by 3% to 4% this year. Additionally, the company is continuing its renovation program, which could support its same-store sales growth.
Amid strong performance last year, PZA increased its monthly dividend three times. It currently pays a monthly dividend of $0.0775 per share, with a forward yield of 6.73%. Furthermore, it trades at an NTM price-to-earnings multiple (next 12 months) of 13.8, making it an attractive buy.
Telus
Second on my list is Telus (TSX:T), which has lost around 25% of its share value compared to its 52-week high. Higher interest rates and an unfavorable announcement from the CTRC (Canadian Radio-television and Telecommunications Commission) have dragged down the company's share price.
In November, CTRC ordered large telecom companies to share their fiber-to-the-home (FTTH) networks with smaller players, so that smaller players can continue to offer their services, thereby increasing competition and reducing prices for consumers. customers. The announcement would discourage companies like Telus, which have invested aggressively in expanding their broadband services. The liquidation has dragged its valuation to attractive levels, with its NTM asking price currently at 1.5.
Despite the short-term weakness, Telus' long-term growth prospects appear strong amid rising demand for telecom services due to digitalization and remote working and learning. In addition, the liquidation has increased its dividend yield to 6.94%.
NorthWest Healthcare Property REIT
Another cheap dividend stock you can buy right now is NorthWest Healthcare Property REIT (TSX:NWH.UN), which owns and operates 219 income-generating healthcare properties with a total leasable area of 17.7 million square feet. Higher debt levels and rising interest expenses took a toll on its finances, dragging its share price down.
However, the healthcare real estate investment trust strengthened its balance sheet by divesting $450 million in assets last year, including non-core assets. It also modified, extended and refinanced its debt facilities and reduced its monthly dividend to improve its financial position.
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Meanwhile, NWH continues to enjoy higher occupancy and collection rates, which stood at 97% and 99% in the quarter ended December. Its highly defensive healthcare portfolio, long-term contracts and inflation-priced leasing agreements could stabilize its finances. The company currently pays a monthly dividend of $0.03 per share, and its forward yield currently stands at 7.68%.
