2024’s Hidden Dividend Treasures: 6 Stocks Primed for a Comeback

TSI’s Scott Clayton has unearthed a sextet of dividend-paying gems hiding in plain sight. These companies, spanning industries from railway giants to potato powerhouses, have seen their share prices take a beating in 2024. But don’t be fooled by their temporary fall from grace – our rigorous TSI Dividend Sustainability Rating System suggests these stocks are coiled springs, ready to bounce back with a vengeance.

We’ve identified six companies that not only maintain rock-solid dividend credentials but also possess the financial firepower and market positioning to deliver potentially explosive returns in 2025 and beyond. These aren’t just survivors; they’re thrivers in waiting.

Picture this: a Canadian railway titan, a telecom behemoth, a global fertilizer leader, a tools manufacturing legend, a French fry empire, and an auto parts kingpin. Sounds like an eclectic mix, right? That’s by design. Our research suggests this diverse group of dividend aristocrats, temporarily bruised but far from beaten, represents a unique opportunity for investors willing to see past the current market myopia.

Excerpt from theglobeandmail.com, December 5, 2024

What are we looking for?

Prime stock picks for new buying – that’s despite their appeal as candidates for tax-loss selling!

The screen

The lure of cutting taxes can spur investors to make costly mistakes. Chief among them – especially this time of year – is the urge to dump high-quality stocks that are down in order to realize a tax loss. Still, the mistake of others can offer you a bargain as the best of these stocks often rebound sharply in the New Year.

In fact, some of the lowest-risk, highest-profit investments you’ll ever make come about because you’ve bought a good stock when other investors were ignoring its value and selling it, particularly during tax-loss season.

We started this search with an extensive list of dividend-paying stocks, before singling out those further battered by tax-loss selling. They otherwise have promising outlooks bolstered by leading market positions. Our system awards points to a stock based on key factors:

One point for five years of continuous dividend payments – two points for more than five;
Two points if it has raised the payment in the past five years;
One point for management’s commitment to dividends;
One point for operating in non-cyclical industries;
One point for limited exposure to foreign currency rates and freedom from political interference;
Two points for a strong balance sheet, including manageable debt and adequate cash;
Two points for a long-term record of positive earnings and cash flow to cover dividends;
One point if the company’s an industry leader.

Companies with 10 to 12 points have the most-secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.

Number Cruncher Stocks: Six turnaround candidates for your long-term portfolio

What we found

Our TSI Dividend Sustainability Rating System generated six stocks with sustainable dividends despite significant share price declines over 2024.

Canadian National Railway Co. (with a 2.2% yield), based in Montreal, operates Canada’s largest railway. The stock is down 14.9% from its March 2024 high.

Telus Corp. (7.3%), headquartered in Vancouver, is Canada’s largest wireless carrier. It also sells landline phone, Internet, TV, and security services in B.C., Alberta and eastern Quebec. The shares are down 11.5% from their January 2024 high.

Nutrien Inc. (4.4%), based in Saskatoon is the world’s largest producer of agricultural fertilizers. The stock is down 18.7% from its May 2024 high.

Stanley Black & Decker Inc. (3.8%), headquartered in Connecticut, is one of the world’s largest makers of hand and power tools. The company’s shares are down 22.4% from their recent September 2024 high.

Lamb Weston Holdings Inc. (1.8%), based in Idaho, is a leading producer of frozen French fries, potatoes and other packaged vegetables. The stock is down 30.3% from its January 2024 high.

Genuine Parts Co. (3.2%), based in Atlanta, Georgia, is a leading seller of replacement auto parts. It also distributes industrial parts such as bearings, seals, pumps and hoses. The shares are down 23.4% from their April 2024 high.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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