Would you like to know about the best dividend stocks Canada in 2021? I’m not talking about the amount of dividends. I’m referring to which dividend stocks in Canada are likely to be more profitable in 2021.
Want to learn about the best cheap Canadian stocks to buy 2021? Or about the best dividend stocks Canada 2021? Check out these best Canadian stocks to buy right now. Bring me the best stocks to buy in Canada for this upcoming year.
Agnico Eagle Mines (TSE:AEM)
It’s been a long time since a Canadian stock in the material sector has been featured so prominently on this list of top stocks.
With the possibility of inflation coming and interest rates increasing, Canadian investors would be crazy to leave their portfolios without any exposure to gold.
As we can see in recent times, gold is making a comeback, and the rising price of gold miner shares is providing some stability to Canadian’s portfolios.
There are a few things I look for in particular when I’m looking at a long term gold play. The first one is mining jurisdictions.
Are there opportunities to make more with smaller, more speculative mining companies? Absolutely.
In fact, we relayed both Leagold Mining and Semafo to Premium members back in 2019, and both companies were scooped up via acquisitions, resulting in some nice returns.
However, for a long term play we want gold companies that mine in safe jurisdictions, where there is relatively little risk of political or regulatory interference.
Agnico Eagle Mines (TSE:AEM) fits that bill. The company primarily operates in Canada, Finland, and Mexico and owns 50% of the Canadian Malartic mine.
In 2020, the company produced 1.74 million ounces of gold, which at the current gold price of $1800/oz~ would equal $3.12 billion USD in revenue.
Agnico has issued guidance that gold production will increase by 300,000 ounces in 2021.
The company is the second largest gold producer in the country with a market cap of $17.6 billion, behind only Barrick Gold.
The company used to be a single mine producer, but has expanded at a rapid rate since the financial crisis of 2008, adding more than 5 mines to its portfolio.
Additionally, through further developments the company plans for a 25% increase in production by 2022.
Agnico has also just achieved Canadian Dividend Aristocrat status, with a 5 year dividend growth streak after its most recent increase in the fall.
Over the past 5 years, Agnico has grown its dividend at a pace of 34.34% annually, and its most recent increase more than doubled this rate as it pumped its dividend up by 75%.
Its yield is small at 1.93%, but with significant cash flow generation in the company’s future, I expect its dividend growth rates to increase.
Air Canada stock
Like all other airlines, Air Canada is seeing a recovery in demand as travel restrictions ease. Many governments have permitted leisure travel to fully vaccinated individuals. Although the oil price is rising to a level last seen in 2016, it will be partially offset by operational efficiency Air Canada brought during the pandemic.
If you are looking for favourable fundamentals, like earnings, cash flow, and lower debt, Air Canada is not a stock for you. In other words, Air Canada is a stock to buy for a short-term only to benefit from the recovery rally. The next six to nine months could see a significant recovery rally as the airline enjoys pent-up demand. The demand may not bring the airline back to profits, but it would reduce the cash burn and help it avoid taking on new debt.
I expect the stock to cross $30, taking a conservative approach, and reach as high as $40, taking a bullish approach. This represents a 25%-65% upside. It means a $1,000 investment could become $1,250 or $1,650. But the risk is high as the rally is not backed by fundamentals. In the worst-case scenario, the stock might fall 16% to $20, reducing your $1,000 investment to $850. There is a greater upside than a downside, making it a stock to invest in this year.
Algonquin Power & Utilities Corp
Algonquin Power & Utilities is a diversified utility company in North America with $10 billion in total assets. The company engages in the generation, transmission, and distribution of water, gas, and electricity to communities across the U.S.
As a growing renewable energy company, Algonquin Power owns a strong portfolio of long term contracted wind, solar and hydroelectric assets with 1.5 GW of total installed capacity.
The company has more than 50 power generation facilities and 20 utilities across North America. Algonquin’s utility business serves nearly 770,000 customers in twelve states across the U.S., through 1,200 miles of electrical transmission lines and 100 miles of natural gas transmission pipelines.
Key Investment Data
- Ticker: TSE:AQN
- Sector: Utilities
- Industry: Utilities – Renewable
- Market Cap: 11.59B
- P/E: 13.59
- Dividend Yield: 4.51%
- Payout Ratio (TTM): 43.60%
Pollard Banknote (TSE:PBL)
The lottery is a great business, but unfortunately the government benefits the most.
Pollard Banknote (TSE:PBL) provides investors one way to participate in the lottery business, while also getting a piece of the growing “iLottery” space.
Pollard Banknote is the number 2 producer of instant lottery tickets in the world. This is the core of Pollard’s business, and it’s a very good business.
The business has high barriers to entry as there are regulations about importing lottery tickets, so Pollard is likely to hold on to its competitive position.
Pollard has grown its instant lottery ticket revenues at a 9% compound annual growth rate since 2012.
The most exciting part about Pollard is its 50% ownership in NeoPollard Interactive.
This is a 50-50 joint venture with NeoGames that is focused solely on the iLottery space, giving states the ability to operate lotteries on the internet.
This is a very new industry, but it is growing rapidly and NeoPollard Interactive is the most successful operator in the industry.
Just 8 states offer instant lotteries on the internet, and NeoPollard operates three of them. And the iLotteries in NeoPollard states have much better higher penetration, indicating that NeoPollard is better than its competitors.
We think it’s inevitable at this point that eventually every jurisdiction that runs lotteries now will add iLottery and given NeoPollard’s success so far, I expect NeoPollard is going to win a lot of business as states and countries legalize it.
The growth in Pollard’s base instant lottery ticket printing business, and its new iLottery business, will ensure the company keeps up its excellent growth.
Over the last 5 years, Pollard has grown revenue 13.7% annually, and it has grown its bottom line even faster, with earnings per share growth of 28.8% per year.
Growth was slower in 2020 because of COVID-19 lockdowns, but analysts expect growth to accelerate again in 2021. Analysts are estimating that Pollard’s revenue will grow 13.3% and earnings per share to grow 7.3%.
But that should just be the beginning. If iLottery takes off like we think it will, Pollard is going to grow into a much larger company.
Even though iLottery is just starting, Pollard Banknote has already proven to be a fantastic investment for shareholders. A $10,000 investment in Polalrd when it went public in 2005 would be worth over $91,400 today.
Over the last year the stock price is up 261% as investors are catching on to the potential of its iLottery business.
Pollard pays a modest dividend, with the yield currently 0.29%. But Pollard does look like it will be growing its dividend.
The company raised its dividend by 33% in 2019, and as earnings grow and the iLottery business matures, I expect the dividend will grow a lot as well.
Bottom line is there is an opportunity to invest in Pollard at the start of a revolutionary growth story, all while Pollard’s core business continues to produce profits.
RioCan REIT
The next Canadian stock worth investing in is RioCan REIT. The REIT has a portfolio of retail properties in the Greater Toronto Area, Ottawa, Calgary, Montreal, Edmonton, and Vancouver. All these are prime areas and enjoy higher rent and occupancy. However, the pandemic put RioCan in soup as lockdown forced retailers to close their shops. The pandemic pushed the REIT from a profit of $775.8 million in 2019 to a loss of $64.8 million in 2020. This was worse than the 2009 crisis when RioCan reported a net profit of $113.9 million.
As the economy reopens, the occupancy rate is rising, and so is rent. This recovery pushed RioCan to a net profit of $145.3 million in the second quarter. This recovery drove RioCan stock 46% since November 2020. Despite this, the stock is trading 25% below the pre-pandemic level. Its rival SmartCentres REIT stock has returned to the 2019 levels.
RioCan is taking time as the REIT cut dividend last year. This is a good time to grab the stock and enjoy a 25% rally in the short term and a 4.4% dividend yield in the long term.
Conclusion:
You’ve been told that to build a solid portfolio, you should be investing in fundamentally sound stock. There are various ways you can go about this, but one way that seems to be gaining more popularity is value investing. In other words, if a stock is trading below its Net Current Asset Value Net Current Asset Value, you may have found a gem.