Canada markets closed
  • S&P/TSX

    19,062.91
    +345.79 (+1.85%)
     
  • S&P 500

    3,911.74
    +116.01 (+3.06%)
     
  • DOW

    31,500.68
    +823.32 (+2.68%)
     
  • CAD/USD

    0.7759
    +0.0064 (+0.83%)
     
  • CRUDE OIL

    107.06
    +2.79 (+2.68%)
     
  • BTC-CAD

    27,414.09
    +12.18 (+0.04%)
     
  • CMC Crypto 200

    462.12
    +8.22 (+1.81%)
     
  • GOLD FUTURES

    1,828.10
    -1.70 (-0.09%)
     
  • RUSSELL 2000

    1,765.74
    +54.06 (+3.16%)
     
  • 10-Yr Bond

    3.1250
    +0.0570 (+1.86%)
     
  • NASDAQ

    11,607.62
    +375.43 (+3.34%)
     
  • VOLATILITY

    27.23
    -1.82 (-6.27%)
     
  • FTSE

    7,208.81
    +188.36 (+2.68%)
     
  • NIKKEI 225

    26,491.97
    +320.72 (+1.23%)
     
  • CAD/EUR

    0.7347
    +0.0040 (+0.55%)
     

3 Low-Yield Stocks to Buy for Decent Growth Potential

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Money growing in soil , Business success concept.
Money growing in soil , Business success concept.

Written by Adam Othman at The Motley Fool Canada

Buying a dividend stock with a low yield might not make sense from a passive-income perspective, but if that low yield comes with healthy and predictable growth potential, it can be a wise investment from a wealth-building perspective.

It can help you increase the size of your nest egg, and if you want, you might change it for an income-producing asset later on. That might result in better long-term returns than holding a high-yield stock for the same period.

A tech stock

Dividends are a rarity in the Canadian tech sector, and a low yield is a consistent trend there. And from the tech sector standards, Open Text’s (TSX:OTEX)(NASDAQ:OTEX) 2.3% yield is not low. It’s usually under or above 2% and has risen to the current level thanks to the 29.4% fall from its recent peak. However, the discount plus the relatively high yield (considering the stock’s dividend history) is only part of Open Text’s charm.

Thanks to its capital-appreciation potential, the stock is a much more compelling buy. Even taking the current fall into account, it has returned roughly 297% to its shareholders through price appreciation alone. And if you buy the current dip, you may experience similar or perhaps, even better growth in the upcoming decade.

A business information services company

Thompson Reuters (TSX:TRI)(NYSE:TRI) has only been around since 2008, but its roots can be traced back to 1851 when one part of the company (Reuters) came into being in London. It was initially a newspaper company that evolved into a business information services and consultancy firm. It’s one of the most trusted names for market news and research.

The company is a well-established aristocrat and has been raising its payouts for quite a while, but its 1.87% yield is hardly the reason to buy this for your dividend portfolio. However, it’s also a remarkable grower which has risen almost 290% in the last decade. This is slightly lower than Open Text’s performance but doubly impressive considering Thompson Reuters’s market capitalization of $59.1 billion.

An engineering professional services company

WSP Global (TSX:WSP) is all about finding the right engineering solutions for its clients. It caters to multiple target markets, but nearly half of its revenue comes from transportation and infrastructure alone. A decent portion of its new projects are related to cutting-edge technologies and focused on sustainability.

The company has a massive global footprint, and only about a third of its revenue comes from North America and Latin American countries.

It’s also a consistent dividend payer currently offering a low 1.1% yield. However, its capital-appreciation potential is significantly more impressive. The stock has risen by about 174% in the last five years alone, after the 27.4% fall, which might continue for a while yet.

Foolish takeaway

The three low-yield growth stocks might not be good additions to your portfolio from a dividend perspective. Still, they can add a decent amount of capital-appreciation potential to your portfolio and expedite the pace of its overall growth. Considering their growth potential (and assuming they can sustain the pace), the dividends can simply be considered a bonus.

The post 3 Low-Yield Stocks to Buy for Decent Growth Potential appeared first on The Motley Fool Canada.

Should You Invest $1,000 In OpenText?

Before you consider OpenText, we think you’ll want to hear this.

Our nearly S&P/TSX market doubling* Stock Advisor Canada team just released their top 10 starter stocks for 2022 that we believe could supercharge any portfolio.

Want to see if OpenText made our list? Get started with Stock Advisor Canada today to receive all 10 of our starter stocks, a fully stocked treasure trove of industry reports, two brand-new stock recommendations every month, and much more.

See the 10 Stocks * Returns as of 4/14/22

More reading

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends OPEN TEXT CORP and WSP GLOBAL INC.

2022

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting