For income-focused investors seeking compelling opportunities, the realm of cheap dividend stocks can be a treasure trove. Among the potential candidates for 2024, two TSX-listed companies stand out: Magna International and Newmont. Investing in fundamentally strong but undervalued stocks not only provides a source of steady income but also opens avenues for long-term capital gains.


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1. Magna International (TSX: MG): Navigating Auto Ancillaries

Market Cap: $22 billion

Magna International, a giant in the auto-ancillary manufacturing space, boasts a market cap of $22 billion, making it one of the largest players on the TSX. While the stock has experienced a 38% dip from its all-time highs, this decline has resulted in an attractive dividend yield of 3.2%.


The company's revenue in Q3 2023 reached US$10.7 billion, marking a substantial 15% YoY increase. Operational efficiencies and cost initiatives propelled its adjusted EBIT to US$615 million, showcasing resilience and adaptability. With a forward earnings multiple of 8.7, Magna International is notably cheap, trading at a 22% discount to consensus price target estimates. Moreover, the company has a history of raising dividends by 12% annually for the past 16 years, underscoring the robustness of its cash flows.


2. Newmont (TSX: NGT): A Glittering Opportunity in Gold

Market Cap: $65 billion

Newmont, a major player in the gold mining sector, commands a market cap of $65 billion and offers investors a dividend yield of 3.9%. Following its acquisition of Newcrest Mining, the company has solidified its position as the world's largest gold company with significant copper production.


Q3 2023 showcased Newmont's prowess, with 1.3 million ounces of gold and 10,000 tonnes of copper produced, generating US$933 million in adjusted EBITDA. The acquisition is expected to yield annual pre-tax synergies of US$500 million within the next two years. Newmont has consistently rewarded shareholders, paying over US$5 billion since 2019 and increasing dividends by almost 35% annually over the last seven years.


Trading at 15 times forward earnings, Newmont stock presents an appealing opportunity, trading at a substantial 71% discount to consensus price target estimates. With a strong financial position, positive production outlook, and potential for higher gold prices in 2024, Newmont positions itself as an intriguing choice for income-oriented investors.

Conclusion: Balancing Income and Growth

As investors chart their course for 2024, Magna International and Newmont emerge as attractive candidates, combining dividend potential with promising growth prospects. The allure of cheap dividend stocks lies in their ability to provide income resilience and capital appreciation over the long term. These opportunities underscore the importance of strategic selection in navigating the dynamic landscape of the TSX.