Written by Kay Ng at The Motley Fool Canada
Recently, the stock market has experienced significant fluctuations, leading many investors to adopt a cautious approach. Nevertheless, those with liquid capital looking for investment opportunities may find that this is an ideal moment to consider undervalued stocks for their portfolios.
In particular, two dividend stocks have seen considerable price declines, creating potential buying opportunities. Both of these companies have robust fundamentals and attractive dividend yields, making them sound options for investors interested in long-term growth and income. Below are two stocks to keep in mind while they remain affordable.
Exchange Income Corporation
Exchange Income (TSX:EIF) is a lesser-known stock that has dropped 14% from its 52-week peak, providing a compelling buying option. Currently priced at $50.87 per share, it is trading at a 27% discount compared to the analyst consensus target price, suggesting a potential upside of 37%. Additionally, Exchange Income offers a reliable monthly dividend yielding nearly 5.2%, a feature that many investors value highly.
goeasy Ltd.
Another noteworthy stock is goeasy (TSX: GSY), which has decreased by 27% from its 52-week high. Priced at $150.39 per share, goeasy’s price-to-earnings (P/E) ratio is at a low of 8.6, approximately 27% below its historical average. Analysts propose a further potential for growth, with target prices indicating a 37% upside.
As a leading Canadian lender catering to non-prime borrowers, goeasy has demonstrated a solid record of profitability and shareholder returns. It has achieved a remarkable dividend growth rate of 30% over the past decade and recently announced a significant 25% increase in its dividend, reflecting its commitment to rewarding investors.
Both stocks, Exchange Income and goeasy, offer substantial opportunities for long-term investors seeking to benefit from discounted share prices. Exchange Income’s diversified portfolio and consistent cash flow growth create a viable option for income investors. Meanwhile, goeasy’s impressive profitability, robust dividend growth, and favorable valuation position it as an attractive choice for those aiming for long-term capital gains.
Given that both stocks are currently trading significantly below their 52-week highs, this could be the right time to consider adding them to your investment portfolio. Although market volatility can be unsettling, these companies offer promising growth potential and strong financial foundations, making them attractive options in the current market.
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