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3 Absurdly Cheap Stocks to Buy and Hold for Years

edit Sale sign, value, discount
Image source: Getty Images

Written by Demetris Afxentiou at The Motley Fool Canada

There’s no shortage of great, if not amazing stocks to buy and hold for years right now on the market. And within that bucket of amazing stocks are several that trade at absurdly cheap levels.

Here’s a look at three of those absurdly cheap stocks, and why they belong in your portfolio.

Massive long-term potential and juicy income

Enbridge (TSX:ENB) is one of the best-known long-term investments on the market. The energy infrastructure behemoth operates the largest and most complex pipeline systems on the planet.

That pipeline network includes both natural gas and crude elements, hauling massive amounts of both across North America. Specifically, Enbridge transports one-third of all North American-produced crude and nearly one-fifth of the natural gas needs of the U.S.

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Suffice it to say, that makes Enbridge an incredibly defensive stock option. But that’s not all Enbridge does. The company also boasts a growing renewable energy business and a sizable natural gas utility.

Both are defensive, growing, and provide ample revenue for Enbridge. This allows the company to invest in growth and pay a handsome dividend.

That dividend currently boasts a yield of 7.4%, making it one of the better-paying options on the market. Enbridge has also given investors generous upticks to that dividend for three decades.

Perhaps best of all, despite all that potential Enbridge trades down 13% in the trailing two years. This makes it one of the absurdly cheap stocks to buy and hold for decades.

What about Canada’s big banks?

Canada’s big banks are among the best long-term options on the market. In short, they boast solid results, stellar growth, and a juicy yield making them great options for any investor.

It doesn’t happen too often, but one of those big bank stocks is one of the absurdly cheap stocks to consider.

Enter Toronto-Dominion Bank (TSX:TD). TD is the second largest of the big banks, and arguably one of the best absurdly cheap stocks to buy.

TD boasts both a solid domestic segment and a lucrative international segment. Unfortunately, in recent months the bank has come under scrutiny, adding to its stock-price woes.

Specifically, TD’s failure to comply with anti-money laundering regulations, and by extension, whatever penalties may get imposed, has put downward pressure on the stock.

Any financial penalties imposed would seriously derail TD’s growth plans. But for long-term investors, it makes the bank one of the absurdly cheap stocks to buy now.

Prospective investors should note that TD’s primary growth driver was its U.S. business. If a decision comes down that slows or even halts that effort, TD will look to other means of fueling growth.

Like using its capital reserves for share buybacks.

This year TD has dipped nearly 10%, while all of its big bank peers are in the black. In fact, given the current stock price, TD trades at a P/E of just 12.9, while its dividend has swelled to 5.3%.

Buy this defensive titan

One final stock that is absurdly cheap right now is BCE (TSX:BCE). BCE is one of Canada’s largest telecoms, offering subscription-based services including wireless, wireline, TV, and internet segments.

Telecoms are also immensely capital-intensive businesses, which is why the stock has dropped in recent years as interest rates have surged.

During that same time, BCE’s dividend, which the telecom has paid out for over a century without fail, has swelled to an insane 8.7%. That includes expected annual increases, the most recent being a 3% uptick this year.

Prospective investors need to stay focused on the longer term. BCE’s stock price will recover once interest rates begin to drop. Furthermore, BCE’s cost-cutting efforts will reduce pressure on the company to slash its dividend.

In short, prospective investors should consider this absurdly cheap stock right now and enjoy that 8.7% yield while it lasts.

Absurdly cheap today, but not tomorrow

Finding the right mix of stocks takes time. More importantly, prospective investors should keep in mind that no stock, even the most defensive investment, is not without some risk.

In my opinion, one or all stocks mentioned should be core holdings as part of every well-diversified portfolio.

Buy them as absurdly cheap stocks, hold them, and watch them grow.

The post 3 Absurdly Cheap Stocks to Buy and Hold for Years appeared first on The Motley Fool Canada.

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Fool contributor Demetris Afxentiou has positions in BCE, Enbridge, and Toronto-Dominion Bank. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

2024