TransCanada Corp (TSX:TRP)(NYSE:TRP) has been on a rough start to start the year, and it could be a great time to scoop up an undervalued dividend stock. In the past month, the stock has declined 7% and year-to-date the share price is down 13%.
As a result of the drop in price and after a recent dividend hike, the stock is now paying shareholders more than 5% and it could be a great opportunity for investors to secure a high payout.
The company's fundamentals have remained strong and it's likely that the recent pullback in the price of oil has been responsible for the sell-off as investor concerns about long-term growth in the industry have likely been renewed.
For investors that are willing to stomach the risk, there are many good reasons to consider buying TransCanada. The company has strong financials and although in its most recent quarter sales were up just 1% year-over-year, net income of $901 million was a big improvement from the $422 million loss that TransCanada recorded a year ago.
In addition, the stock trades at very reasonable multiples with a price-to-earnings ratio of less than 16 and at a little more than two times its book value.
And although the stock has seen some volatility in the past several years, over the long term it has provided investors with a lot of stability. In the past 10 years the share price has risen nearly 40%. It is one of the largest publicly traded companies on the TSX and with strong financials it is well-equipped to handle any adversity that comes its way.
