Two Dividend Stocks That May Provide Outstanding Growth

If you’re looking to set yourself up with a healthy retirement, investing in dividend stocks is one of the best possible strategies to do so. Growth stocks provide the potential for outsized returns, but in general pose higher risk for ruin in the event of a stock market crash or lackluster results.

Finding Canadian dividend companies that are continually paying and raising dividends can create a snowball effect, especially when dividends are DRIP’ed. Keep in mind however, the dividend alone is not a reason to buy a stock. The stock must still present an excellent entry opportunity. Buying dividend stocks at a premium could result in a loss due to stock depreciation, wiping your dividend out in the end.

Here are two dividend stocks that are both undervalued and provide excellent dividend growth.

Canadian Natural Resources (CNQ)

Canadian Natural Resources (CNQ) is an independent crude oil and natural gas company. The company has a balanced and diversified product base. CNRL has a strong history of generating significant cash flows and is able to relay this into one of the best performing dividends in the country.

The company has more than doubled its earnings from one year ago today, posting diluted earnings per share of $3.17 compared to just $1.27 in 2018. Adjusted funds flow has dipped from $5 billion to $4.8 billion year over year, however this could be attributed to higher oil prices realized throughout most of 2018.

In terms of dividend, Canadian Natural has raised dividends for 18 straight years, and has the highest 5 year dividend growth rate out of all major oil and gas companies at 18%. At this rate, the company is set to almost double its dividend every 5 years. Its most recent increase of 11% doesn’t quite match its 5 year rate, but with the negative sentiment towards the oil and gas sector right now, a double digit dividend increase is still an excellent achievement.

The company currently yields 4.54%. And with only 49% of the company’s free cash flows being used to pay its dividend, a one year estimate price of $45.56, Canadian Natural at $33.25 is one of the better dividend stocks to own right now.

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