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After reaching new heights in the first half of 2022, Canadian dividend stocks have plunged sharply in the last few months. Growing macroeconomic concerns like high inflation, soaring interest rates, renewed geopolitical tensions, and continued supply chain disruptions have badly hurt investors’ sentiments in the last couple of quarters. These concerns have driven the TSX Composite Index down by nearly 16% from its record highs from earlier this year.
Once-in-a-generation opportunity to buy dividend stocks
These are the times when investors repeatedly need to remind themselves that no bear market lasts forever. While you may find the short-term economic outlook quite gloomy, these temporary economic challenges might not permanently affect fundamentally strong businesses and their long-term growth outlook.
That’s one of the key reasons why this bear market could arguably be the best time — probably a once-in-a-generation opportunity — to buy some fundamentally strong dividend stocks at a big bargain. By doing so, you can expect to receive outstanding returns on your investments when the stocks in your portfolio begin a handsome recovery, as economic concerns gradually subside in the future. Now, let me quickly highlight two of the best Canadian dividend stocks you can buy in the bear market of 2022.
A high-yield dividend stock with industrial real estate assets
The ongoing market chaos has led to a sharp correction in many reliable REITs (real estate investment trusts) with monthly dividends, making their dividend yields look more attractive. Dream Industrial REIT (TSX:DIR.UN) is one such dividend stock to consider buying in Canada right now. It’s a Toronto-based unincorporated, open-ended REIT with a market cap of about $2.7 billion. Its stock trades at $10.47 per share with nearly 40% year-to-date losses after consistently rising for the previous six years. While this dividend stock distributes payouts on a monthly basis, it has a high annual yield of nearly 6.7%.
Dream Industrial REIT currently holds 257 industrial assets in its portfolio with about 46 million square feet of gross leasable area. These industrial properties are primarily located in Canada, Europe, and the United States. In 2021, the Canadian REIT registered a solid 22.8% YoY (year-over-year) growth in its total revenue, and its adjusted funds from operations rose by 14.1% from a year ago. Despite near-term macroeconomic challenges, Dream Industrial consistently expanding business with new industrial assets acquisition should help it accelerate financial growth in the long run, making its stock look undervalued.
A fast-growing, dividend-paying company to own
goeasy (TSX:GSY) could be another quality Canadian dividend stock to buy in this year’s bear market. It’s a financial services provider based in Mississauga with a market cap of $1.7 billion, as its stock price hovers around $106.29 per share at the time of writing. Just like Dream Industrial REIT, goeasy stock has also lost nearly 40% of its value in 2022 after jumping by more than 400% in the previous three years combined. Currently, it has a decent dividend yield of nearly 3.4%.
Despite facing the negative impact of high inflation in recent quarters, the demand for its non-prime leasing and lending services remains strong. This could be one of the key reasons why Street analysts estimate its total revenue to rise by 23.6% YoY and its earnings to improve by 11.2% in the ongoing year. I expect goeasy’s continued focus on secured ranges of home equity and auto lending to help it boost financial growth further, despite minor short-term obstacles. Given that, you can consider buying this dividend stock in this year’s bear market when it’s down by more than 40%.