2 Absurdly Cheap Canadian Stocks With Stellar Dividends

Now might be the perfect time to load up on these Canadian dividend stocks trading at discounts.

| More on:
grow dividends

Image source: Getty Images

Value investing is a tried-and-true strategy for investors seeking long-term wealth growth. Investing in shares of companies trading below their intrinsic values allows you to leverage capital gains to grow your portfolio’s value in the long run. Finding and investing in undervalued stocks requires conducting your due diligence and making carefully weighted decisions.

As of this writing, the S&P/TSX Composite Index is down by 8.8% from its 52-week high in March 2022. The Canadian benchmark index has rallied in the last few weeks, up by 10.6% from its July 14 levels. Despite the double-digit rally over the last month, many companies have underperformed the broader market, presenting value-seeking investors with several long-term buying opportunities.

Even better still, several high-quality dividend-paying stocks trade for significantly lower prices right now. Depressed valuations have inflated dividend yields for such dividend stocks. As the market stabilizes further and stocks recover to better valuations, we will see dividend yields go down.

Today, I take a look at two cheap dividend stocks with over 4% dividend yields you could consider investing in today for long-term value and dividend income.


BCE Inc. (TSX:BCE)(NYSE:BCE) is a $59.7 billion market capitalization Canadian telecom giant. The company provides wireless and wireline internet and telecommunications services to roughly 10 million customers throughout Canada.

BCEis a defensive stock due to the essential nature of the service it provides. The telecom’s revenue streams tend to hold up well during economic downturns, and it has the liquidity position to invest in projects to fund its growth despite uncertain economic environments.

As of this writing, BCE stock trades for $65.41 per share and boasts a 5.63% dividend yield. Down by 11.7% from its 52-week high, BCE stock trades for a considerable discount at current levels. The company is expanding its 5G network and investing $5 billion in capital projects.

BCE is gearing up to increase its cashflows, with a massive growth runway ahead. Now could be the perfect time to invest in its shares for reliable passive income and solid growth potential.

Sun Life Financial

Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF) is a $36.5 billion market capitalization Canadian financial services company known primarily for its life insurance business. One of Canada’s biggest life insurance companies, Sun Life also offers retirement and wealth management services to customers in Canada, the US, and Asian markets.

The insurance industry expects a continued slowdown in COVID claims this year. Together with cancer and infant care, these claims helped push up the number of Sun Life’s million-dollar+ claims 37% from 2018 to 2021. As the company continues to diversify globally, the US health and benefits and asset management businesses each led with 30%-plus growth in net income in Q2 2022 over the year-ago quarter. These two businesses represent about 52% of revenues.

As of this writing, Sun Life Financial stock trades for $62.31 per share and boasts a 4.43% dividend yield. Down by 16% from its 52-week high, Sun Life stock also trades for a significant discount at current levels.

The last 10 years have seen Sun Life stock deliver annualized returns of around 13.4% and steady dividend growth. Investing in its shares as it trades below its all-time high could be an excellent long-term bet to consider.

Foolish takeaway

Finding dividend stocks on the TSX yielding higher than 4% is not difficult. However, it is important to identify stocks with the potential to deliver greater total returns in the long run. Investing in undervalued stocks can provide you with that opportunity.

BCE stock and Sun Life Financial stock could be worthwhile additions to your portfolio for this purpose.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

Retirement plan
Dividend Stocks

Planning for Retirement? Here Are the Best Canadian Dividend Stocks to Buy

Buying two of the best Canadian dividend stocks now for the long term can help you retire without financial worries.

Read more »

investment research
Dividend Stocks

A Dividend Giant I’d Buy Over TD Bank Stock

Energy and financials are the TSX’s sector heavyweights, but I’d choose a dividend giant in the former over a big…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

2 Dividend Stocks Worth a Permanent Spot in My TFSA

Restaurant Brands International (TSX:QSR) and Berkshire Hathaway (NYSE:BRK.B) are two of my top TFSA holdings that I intend to hold…

Read more »

Increasing yield
Dividend Stocks

3 Canadian Dividend Stocks Offering High Yields and Reliable Income

These valuable dividend stocks offer solid deals right now, with ultra-high yields that will certainly last well beyond this downturn.

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

Best of Both Worlds: 3 Growth Stocks That Also Pay Dividends

Dividend stocks are great until a downturn ends. But luckily, these three dividend stocks also offer a massive amount of…

Read more »

Payday ringed on a calendar
Dividend Stocks

Monthly Passive Income: 2 Top TSX Dividend Stocks to Buy in June 2023

Here are two of the best TSX monthly dividend stocks you can buy in June 2023.

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in June 2023

Top TSX dividend stocks are now on sale.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Retirees: 2 TSX Dividend Stocks That Reliably Pay You Cash

With strong underlying businesses, high-yielding dividends, and stable cash flows, these two TSX stocks can be excellent investments to consider.

Read more »