3 Canadian Dividend Stocks That Are Undervalued and Ready to Soar

Investors on the hunt for discounts should look to snatch up undervalued dividend stocks like Suncor Energy Inc. (TSX:SU) and others in late May.

| More on:

The S&P/TSX Composite Index was down 95 points in early afternoon trading on Thursday, May 18. Some of the worst-performing sectors included battery metals, financials, and utilities. Today, I want to zero in on three Canadian dividend stocks that look undervalued and poised for a rebound in the weeks and months ahead. Let’s jump in.

This Canadian dividend stock in the energy space looks dirt cheap right now

Suncor (TSX:SU) is based in Calgary and operates as an integrated energy company in Canada and around the world. Shares of this dividend stock have dropped 10% month over month at the time of this writing. That has pushed the stock into negative value territory for the year-to-date period. Investors who want to see more can toggle the interactive price chart below.

This company released its first-quarter fiscal 2023 earnings on May 8. Suncor generated adjusted funds from operations (AFFO) of $3.0 billion, or $2.26 per common share — down from $4.09 billion, or $2.86 per common share, in the first quarter of fiscal 2022. Moreover, adjusted operating earnings dropped from $2.05 billion, or $1.54 per common share. Suncor also moved forward with the sale of its wind and solar assets for gross proceeds of $730 million.

Shares of this dividend stock currently possess a very favourable price-to-earnings (P/E) ratio of 6.4. Better yet, Suncor offers a quarterly dividend of $0.52 per share. That represents a strong 5.4% yield.

Here’s another undervalued income yielding equity that looks poised to pop

Brookfield Asset Management (TSX:BAM) is a Brookfield-based company that provides alternative asset management services. Its shares have dropped 4.8% month over month at the time of this writing. The stock is down 2.9% so far in the year-to-date period.

Investors got to see Brookfield Asset Management’s first-quarter fiscal 2023 earnings on May 10. Distributable earnings rose to $563 million compared to $491 million in the first quarter of fiscal 2022. Meanwhile, Brookfield Asset Management has raised $19 billion in the year-to-date period. It is close to meeting the goals for its fifth flagship infrastructure fund. Moreover, it invested $17 billion of capital in the first quarter.

This dividend stock has dropped 4.6% over the past month. Its shares are down 2.7% in 2023. Brookfield Asset Management last declared a quarterly dividend of $0.32 per share, which represents a solid 4% yield.

Why this undervalued Canadian dividend stock belongs in your portfolio today

Nutrien (TSX:NTR) is the third and final dividend stock I’d look to snatch up right now. This Saskatoon-based company provides crop inputs and services and saw its value spike as the Ukraine-Russia conflict disrupted the global agricultural and fertilizer spaces. However, this dividend stock has plunged 16% so far in 2023.

This company unveiled its first-quarter fiscal 2023 earnings on May 10. Nutrien reported potash and nitrogen adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) both reached $676 million in the first quarter of 2023, which was down year on year due to lower net realized selling prices and a dip in overall sales volumes. For the full year, Nutrien now forecasts full-year adjusted EBITDA of $6.5 billion to $8.0 billion, or $5.50 to $7.50 per share.

Shares of this dividend stock currently possess a very attractive P/E ratio of 4.7 at the time of this writing. Meanwhile, it offers a quarterly distribution of $0.53 per share, representing a 3.4%.

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.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

Portfolio Payday: 3 TSX Dividend Stocks That Pay Monthly

Investors can expect to earn monthly dividend income for life by adding these three TSX stock to their portfolios.

Read more »

A plant grows from coins.
Dividend Stocks

3 Cheap Canadian Stocks That Offer 7% Dividend Yields

Retirees looking to build pension portfolios have an opportunity to buy great TSX dividend-growth stocks at discounted prices.

Read more »

dividends grow over time
Dividend Stocks

2 Dividend Stocks That Can Generate $2,000 in Passive Income by 2025

Investing in high-dividend stocks such as Whitecap can help you generate $2,000 in annual passive income by 2025.

Read more »

edit Woman calculating figures next to a laptop
Dividend Stocks

Should You Invest in BCE Stock for its Dividend?

BCE stock is not yet out of the woods. But this article could change your perspective about the stock and…

Read more »

sale discount best price
Dividend Stocks

Bargain Hunting for Dividends: 3 High-Yield Stocks Haven’t Been This Cheap in Years

Enbridge (TSX:ENB) stock's key enterprise value multiple reached a new multi-year low recently. BCE remains a high-yield dividend play while…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Cash in Your Pocket: 3 TSX Dividend Stocks That Pay Out Monthly

Bolster your monthly income with these three dividends stocks that act like regular paycheques.

Read more »

A plant grows from coins.
Dividend Stocks

Beat the TSX Index With These Cash-Gushing Dividend Stocks

These cash flow-rich stocks are more likely to gush passive dividend income streams long into the future.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Here Are My Top 5 Dividend Aristocrats to Buy Right Now

Canadian National Railway (TSX:CNR) is a Dividend Aristocrat with 27 years of dividend growth.

Read more »