The stock market is currently on an upward trajectory as declining interest rates elevate hopes for economic recovery. While growth stocks have swiftly aligned with this momentum, several income stocks are still languishing near multi-year lows. This discrepancy occurs because the impact of interest rate cuts takes time to filter through the economy and yield tangible results.

A One-in-a-Decade Investment Opportunity

Investors should seize this rare opportunity to buy the dip in income stocks and secure a higher dividend yield for the long haul. A robust yield combined with the eventual recovery of stock prices could serve to substantially boost your passive-income investment portfolio.

Telus Stock: An Undervalued Gem

For value investors, Telus (TSX:T) stands out as a compelling choice. Despite strong fundamentals, the company's stock is undervalued due to temporary market obstacles following the Rogers and Shaw merger, which caused significant disruptions in the telecom sector. Telus has been aggressively expanding its 5G infrastructure, leading to increased capital expenditures when interest rates were at a decade high, sending its stock price down to around $20, levels not seen since 2016.

Currently, Telus has a staggering debt of $28.15 billion, resulting in an annual interest expense of $1.33 billion, squeezing its cash flows and net income. The company's dividend payout ratio peaked at 83% in June 2024, exceeding its target range of 60-75%. However, the worst times appear to be behind the company. Rapid interest rate cuts by the Bank of Canada could substantially alleviate pressure on net profits. Additionally, the rollout of 5G technology and investments in artificial intelligence (AI) are poised to unlock new revenue avenues in the cloud space.

Investing a lump sum in Telus could potentially secure you an attractive annual dividend yield of 6.8%. Plus, consider joining Telus’s dividend reinvestment plan (DRIP), which has an ambitious growth target of 7% annually, with incremental increases of 3-4% occurring every six months. The opportunities offered by 5G technology dwarf those of its predecessor, 4G, positioning Telus for significant dividend growth over the next decade.

RioCan REIT: A Safe Bet for Solid Returns

Another income stock worth your attention is RioCan REIT (TSX:REI.UN). While its dividend history may not be the most impressive, it boasts a strong property portfolio that is well-diversified across tenants, with no single tenant accounting for more than 5% of total rental income. The pandemic forced RioCan to cut its dividends; however, its revised distributions have now allowed it to stabilize at a lower payout ratio of 61.5% based on funds from operations.

RioCan is strategically positioned to reap substantial returns in a bullish market, especially given that most of its properties are located in the Greater Toronto Area, a region that commands higher rental rates. While grocery stores might not generate high rents, specialty retail outlets can contribute significantly to revenue. The book value of the REIT’s assets indicates that one unit is worth $25.02, while it is currently trading at only $20.5.

The current market continues to undervalue the REIT, pricing its units below pre-pandemic levels of $26-$28. As the real estate market rebounds, RioCan’s property portfolio will likely appreciate, thus propelling its unit price back toward previous highs.

By investing in RioCan now, you can capitalize on a yield of 5.45% alongside the potential for a capital appreciation ranging from 30-36%.

Investor Takeaway: Act Now for Unmatched Opportunities!

In conclusion, as the stock market rebounds, now is the time to consider income stocks that are poised for recovery. With strong fundamentals, attractive dividend yields, and promising growth prospects, Telus and RioCan REIT present unparalleled opportunities that you won't want to miss. Start investing today, and set yourself on the path to financial success!