These 5 TSX undervalued dividend-paying stocks can be a steal

Highlights

  • One of the below undervalued dividend-paying companies posted a net earnings growth of 35 per cent YoY in its latest quarter.
  • Among the ones listed, the highest ROE was 198.02 per cent.
  • These companies have a dividend history with the highest five-year dividend growth rate among them being 13.23 per cent.The S&P/TSX Composite Index, a premier index representing the Canadian Equity market, posted a Year-to-Date (YTD) return of 18.77 per cent. In contrast, one of these undervalued dividend-paying companies posted a higher YTD return of 76.82 per cent.

Moreover, the S&P/TSX 60 index representing large-cap Canadian companies posted a YTD return of 19.8 percent, outperformed by three of the undervalued companies represented here.

On the backdrop of the highest ROE here of 198.02 per cent, and the lower price bands, let us look at some of the dividend-paying undervalued Candian stocks.

  1. Gran Colombia Gold Corp. (TSX: GCM)

Gran Colombia is a metal and mining company engaged in the exploration and development of gold and silver. The gold properties of the company are based in Colombia, and its major revenue is derived from the sale of gold.

The metal and mining company is expected to pay a monthly dividend of C$ 0.015 per share on September 15, 2021. The dividend yield stood at 3.87 per cent on September 10, 2021. The company held earnings per share (EPS) of 2.76, return on equity (ROE) of 46.2 per cent and return on assets (ROA) of 26.25 per cent on this day.

Gran Colombia posted consolidated revenue of US$ 96.4 million in the second quarter of the fiscal year 2021, and gold production in the same period was 52,198 ounces.

At the market close of September 9, stocks of Gran Colombia were priced at C$ 4.64, while the stocks reached their 52-week high price of C$ 8.4 on January 5, 2021.

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  1. Canadian Banc Corp. (TSX: BK)

This dividend-paying undervalued company posted a price-to-earning (P/E) ratio of 1.7 and held a market cap of C$ 132.31 million on September 10. Canadian Banc is a mutual fund company that invests in a portfolio of Canadian banks intending to pay dividends every month.

The mutual fund company is scheduled to roll out a monthly dividend of C$ 0.102 on September 10, 2021. The dividend yield was 9.84 per cent on this date.

The stock price of the mutual fund company closed at C$ 12.39 on September 9, which traded close to 88 per cent above its 52-week low of C$ 6.6 (October 30, 2020). Over the past year, the stock price gained 69 per cent roughly.

Some of the other valuation parameters of Canadian Banc were an EPS of 7.43, ROE of 198.02 per cent, and ROA of 37.08 per cent on September 10.

As per the fund update on August 31, the mutual fund had a cash weightage of three per cent and a Canadian equity weighting of 97 per cent. 

Also Read: These 3 Undervalued Financial Stocks Look Like A Steal Now

  1. E-L Financial Corporation Limited (TSX: ELF)

E-L Financial is a C$ 3.59 billion market cap (September 10) insurance company that underwrites health insurance and life insurance policies and provides other services like mutual funds and annuity-based products.

On October 15, 2021, the insurance company is expected to issue quarterly dividends of C$ 2.5 per share. The average five-year dividend growth rate stands at 6.7 per cent, and its dividend yield was 1.03 per cent on October 15, 2021.

The undervalued dividend-paying company held a P/E ratio of 2.5, a price-to-book (P/B) ratio of 0.5, and an ROE of 21.79 per cent on September 10. In Q2 FY21, E-L Financial posted a consolidated shareholder's net income of C$ 241 million and C$ 65.47 per share.

The one-year stock return of the insurance company was 44 per cent and returned close to 33 per cent in the last nine months. On September 9, the stock price traded two per cent below its 52-week high of C$ 989.99 (May 10, 2021) and closed at C$ 970 on the same day.

Also Read: Dividend Lovers! 4 Great TSX Stocks With Over 7% Yields

  1. Equitable Group Inc. (TSX: EQB)

The Canadian company offers mortgages for investment and commercial properties, owner-occupied properties, and securitized financing. The company also provides other investment products like a high-interest savings account and guaranteed investment certificates.

Equitable Group held a market cap of C$ 2.58 billion and a P/E ratio of 9.3.  Moreover, the company posted an ROE of 17.8 per cent and a debt-to-equity (D/E) ratio of 6.67 (at the time of writing).

The insurance company is set to roll out its next quarterly dividends of C$ 0.37, expected to be paid on September 30, 2021. The five-year dividend growth rate stood at 13.23 per cent.

On a YTD basis, the stock return was 51 per cent of Equitable Group, and the stock price expanded by roughly 97 per cent over the past year. It closed at C$ 152.2 on September 9.

In Q2 FY21, Equitable Group posted net earnings of C$ 70.8 million, up 35 per cent Year-over-Year (YoY).

  1. North American Financial 15 Split Corp. (TSX: FFN)

The C$ 225.04 million market cap asset management company invests in equities of large-cap Canadian and US companies. The undervalued dividend-paying company is set to pay a monthly dividend of C$ 0.113 on September 10, 2021. The dividend yield stands at 18.76 per cent on this date.

The stock price of the asset management scrip closed at C$ 7.25 apiece on September 9. It rocketed by 119 per cent over the past year, but it dipped on a quarter-to-date (QTD) basis. Its YTD was 76.82.

On the valuation metrics, the P/E ratio of the company was 1.6, EPS 4.45, ROE of 79.88 per cent, and ROA of 26.31 per cent.

Bottom line:

These dividend-paying undervalued stocks look like a great steal for now, with the lowest P/E ratio being 1.6 and the highest monthly dividend yield being 18.76 per cent.

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