Looking for Lifetime Value and Dividends? These Two Stocks Are Perfect

Published on: Sep 18, 2024
Author: Amy Liu

Passive income stocks typically come from dividend-paying companies that provide regular dividends, helping wealth grow steadily over time. In fact, historical data shows that many dividend stocks on the Toronto Stock Exchange have an average annual return of around 8%, including dividends.

By reinvesting these dividends, investors can take advantage of compound growth, resulting in a higher portfolio appreciation. This strategy not only offers stability but also serves as a reliable source of retirement income. Let’s take a look at two mining stocks.

First is the oil and gas company Parex Resources (TSX: PXT), with a market capitalization of CAD 1.33 billion and an expected price-to-earnings ratio of 5.06, making it a potentially undervalued stock with great growth prospects. The enterprise value to EBITDA ratio is 1.29, which also indicates substantial earnings relative to its overall value. Moreover, Parex offers an appealing dividend yield of up to 11.73%, providing investors with a stable income source.

Based on the company’s performance for the second quarter of 2024, Parex reported operating funds of CAD 181 million, representing a 17% increase from the previous year.

This earnings momentum further solidifies Parex’s position as a robust investment. Although the company’s quarterly earnings were affected by one-time foreign exchange gains, it is still expected to meet the lower end of its 2024 production guidance. The stock also offers solid operational performance and focuses on returning capital to shareholders. The stock buyback and dividend plans of Parex strongly indicate its commitment to maximizing shareholder value.

With a beta coefficient of 1.45, this stock reflects moderate market risk, making Parex an attractive option for long-term investors seeking growth and safety.

Next is the mining company Labrador Iron Ore Royalty (TSX: LIF), particularly suited for investors interested in the mining sector. LIF has a market capitalization of CAD 1.84 billion and an expected P/E ratio of 7.45, showing strong earnings momentum. A profit margin of 99.70% and a return on equity of 31.89% are notable indicators. In the second quarter of 2024, LIF reported adjusted cash flow per share of CAD 1.11, a 47% increase compared to the previous year. This strong cash flow enables the company to maintain a high dividend yield of 10.28%, making the stock an excellent choice for passive income.

Whether you are investing in energy or iron ore, both options offer stable sources of income and growth potential.

Iron Mining Oil & Gas Personal Finance