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Highlights
- Investors can tackle the current volatile market situation by targeting quality dividend stocks.
- The S&P/TSX 60 VIX Index has increased by nearly 24 per cent this year.
- The S&P/ TSX Composite Index fell by five per cent this year.
Market volatility has been sending investors after safe haven investments like gold and quality stocks like dividend payers. While the S&P/ TSX Composite Index has risen recently, it is still down by about five per cent year-to-date (YTD).
The S&P/ TSX 60 VIX Index, which measures volatility in the Canadian equity market, has also increased by nearly 24 per cent so far this year. This can lead some investors towards quality stocks that currently available at discounted prices.
Here are three TSX dividend stocks you could explore in the current market scenario.
1. Royal Bank of Canada (TSX: RY)
Royal Bank of Canada is one of the top lenders in Canada, with a market capitalization exceeding C$ 179 billion (as of May 20). Banks lend money to the general public to keep the economy running. Hence, their business is likely to be less affected or stabilize sooner than others from the market volatility.
Royal Bank’s return on equity (ROE), which indicates the company’s financial performance by dividing its net income by shareholders’ equity, was almost 19 per cent. Stocks of Royal Bank have returned roughly five per cent in one year.
Also read: FFN, DF, DGS, LCS & FTN: 5 top TSX dividend stocks under $10
2. Manulife Financial Corporation (TSX: MFC)
Manulife Financial Corporation recently declared a quarterly dividend of C$ 0.33 per share, due for payment on June 20. The life insurer and wealth manager had a dividend yield of almost six per cent. The financial service company held an ROE of roughly 15 per cent. Its debt-to-equity (D/E) ratio was low, around 0.23, signifying that the company mainly utilizes equity financing compared to debt.
MFC stock lost nearly 13 per cent in 12 months, and its Relative Strength Index (RSI) value was about 27.07, according to EODHD/Others. Investors should note that RSI below 30 signifies that a stock is oversold in the market.
3. Canadian Natural Resources Limited (TSX: CNQ)
CNQ scrip gained about 47 per cent YTD. This oil and gas stock has catapulted approximately 94 per cent in returns in nine months.
CNQ’s dividend yield was almost four per cent, and ROE was about 26 per cent as of May 20. The energy producer is scheduled to pay a quarterly dividend of C$ 0.75 per share on July 5.
Also read: H, AQN, CU, NPI, ALA: TSX utility stocks to buy amid recession concerns
Bottomline
These three TSX dividend stocks are large-cap companies and belong to two different sectors - financial and energy – that are vital to the Canadian economy. Although the S&P/TSX Capped Financial Index decreased by about eight per cent YTD, Royal Bank (TSX:RY) and Manulife Financial (TSX:MFC) are known to be backed by robust financials and business operations.
The Canadian energy sector is the sector that has fared well than others, mainly due to surging oil and gas prices. Hence, Canadian Natural Resources (TSX:CNQ) can profit in the long term.
Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
