1 Dividend Stock Down 20% to Buy Right Now (2024)

Home » Investing » 1 Dividend Stock Down 20% to Buy Right Now

Here’s why this undervalued dividend stock, offering a yield of roughly 6%, is one of the best investments to buy now and hold for years.

With many high-quality Canadian dividend stocks trading off their highs in this environment, now is an excellent opportunity for investors to find long-term investments to buy.

And while no one can predict when the economy will recover or the market might start to rally, these environments never last forever, so it’s essential to take advantage when you can.

And when it comes to buying dividend stocks undervalued, not only can you see significant capital gains as they rally back to fair value and the market recovers, but when you buy a stock while it’s undervalued, you also lock in a higher dividend yield on your investment.

So with that in mind, if you’re looking for a top dividend stock to buy right now, here’s why Emera (TSX:EMA), trading nearly 20% off its 52-week highs, is one of the best to consider.

Utility stocks are ideal in this economic environment

It’s essential when building a stock portfolio to diversify with a tonne of different businesses. This way, no matter how the economy and market perform, you protect your capital and have exposure to different opportunities.

For example, in the current environment, there is still a lot of uncertainty, and interest rates are considerably high.

But for a stock like Emera, the worst should be over. This is because utility stocks are highly reliable and robust and should be able to continue to be profitable even through a recession.

So the fact that there is so much uncertainty right now makes Emera a compelling buy since it’s one of the lowest volatility stocks on the market.

In addition, typically, some of the most severe headwinds that utility stocks face come during rising rate environments.

And with most, if not all, interest rate increases now looking like they are in the rearview, not only should Emera have minimal downside risk going forward, but it could soon begin to rally.

However, it’s worth noting that just because Emera seems like an excellent investment in this specific environment is not the only reason it’s worth investing in. Another major reason to invest in Emera is the fact it’s such a high-quality company, and it’s one you can have confidence owning for the long haul.

It’s essential when investing that the number one focus is on finding high-quality stocks which you can own for years since it’s impossible to predict what might happen with the stock market or the economy in the near term.

Why is Emera one of the top dividend stocks to buy now?

As I mentioned earlier, the fact that Emera is so defensive, and its revenue and cash flow are so predictable makes it an ideal dividend stock to add to your portfolio.

Furthermore, with Emera constantly investing in expanding its operations and growing its profitability, its dividend isn’t just consistently safe. It’s constantly growing.

In fact, right now, it’s in the midst of a multi-year investment plan that’s forecasted to drive at least 7% annualized rate base growth through 2026. Furthermore, these investments are also expected to drive dividend growth by 4% to 5% through 2026 as well.

Already Emera has a 17-year streak of consistent dividend increases, showing why it’s one of the top dividend stocks to buy now and hold for years. Plus, while it trades off its highs, it’s offering a dividend yield just shy of 6%, an attractive yield for a stock in the utility sector.

Therefore, if you’re looking for a cheap and high-quality dividend stock to buy now that you can hold for years to come, Emera is certainly one of the best Canadian stocks to consider today.