2 Magnificent TSX Dividend Stocks Down 33% to Buy and Hold Forever

If you’re looking for dividend stocks offering more potential in the very near future, these two are ones I’d pick up now.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published December 30, 2024 9:00 pm EST

OpenText (TSX:OTEX) and Lundin Mining (TSX:LUN) have both taken a bit of a tumble lately. In fact, both stocks are down 33% as of writing from 52-week highs. Yet that doesn’t mean they’ve lost their charm. In fact, if you look closely, these two TSX-listed stocks might be an opportunity long-term investors dream about. So let’s get into it.

Safety helmets and gloves hang from a rack on a mining site. — Source: Getty Images

OpenText

OpenText, a heavyweight in enterprise information management, has seen its stock slip recently. Despite this pullback, OpenText’s fundamentals remain solid. The dividend stock offers a forward price/earnings (P/E) ratio of just 8.1. Yet it’s now trading at an attractive valuation relative to its earnings potential. Profit margins are holding steady at 8.4%. Plus operating margins of nearly 20% signal the company’s ability to run a tight, efficient operation. Even during uncertain economic times. For those who appreciate consistent dividends, OpenText doesn’t disappoint. Its forward annual dividend yield of 3.5% at writing provides steady passive income.

Digging into its most recent quarterly performance, OpenText’s revenue over the trailing 12 months came in at $5.6 billion. While there was an 11% year-over-year dip in quarterly revenue, earnings growth stood out, rising 4.3% during the same period. This highlights the company’s ability to control costs and deliver value to shareholders even as top-line revenue faces some headwinds.

Add in robust operating cash flow of $842.8 million and levered free cash flow of $928 million, and OpenText’s financial health looks strong enough to weather short-term volatility. The tech sector has had its share of ups and downs. Yet OpenText’s consistent dividend payments and improving earnings outlook suggest the market may be underestimating its potential. For investors with a long-term view, this could be the ideal moment to scoop up shares at a relative discount.

Lundin

Lundin Mining, on the other hand, offers a very different kind of opportunity but one that’s equally compelling. The dividend stock is currently trading at $12.34, down about 1.5% recently. As a diversified base metals producer, Lundin operates in the ever-cyclical mining industry. The company’s market cap sits at $9.7 billion. And with a forward P/E ratio of 12.9, it’s reasonably valued given its growth potential. Lundin’s operating margin of 24% and profit margin of 6.6% demonstrate the company’s ability to operate profitably despite fluctuating commodity prices. Investors looking for income will also appreciate the company’s forward annual dividend yield of 2.9% at writing – a respectable payout that adds stability to an otherwise volatile sector.

Lundin’s recent earnings report for Q3 2024 painted a positive picture. Revenue came in at $1.1 billion, supported by the sale of 90,069 tonnes of copper at a solid realized price of $4.29 per pound. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) hit $457.7 million, while net earnings attributable to shareholders reached $101.2 million, or $0.13 per share. These numbers reflect Lundin’s ability to capitalize on strong copper prices, which remain a major driver for the company’s bottom line. Lundin’s diversified operations, spanning Canada, Sweden, Chile, and Brazil, give it exposure to a variety of markets while reducing its dependency on any single jurisdiction.

What’s particularly exciting about Lundin right now is its strategic realignment. The recent sale of the Neves-Corvo and Zinkgruvan mines for up to $1.5 billion represents a shift toward optimizing its portfolio. By offloading these assets, Lundin will free up capital to focus on core projects and explore new growth opportunities in its pipeline. This kind of strategic maneuvering often signals a company preparing for its next phase of expansion. And investors willing to hold for the long haul may reap the benefits. With total cash on hand at $349.6 million and operating cash flow at $1.2 billion, Lundin also has the liquidity needed to execute its plans without overstretching its balance sheet.

Bottom line

Both OpenText and Lundin Mining stand out as solid dividend stocks for investors looking for value in a market where many stocks remain fully priced. While recent price dips might cause short-term concern, for those willing to hold, these companies appear to be setting the stage for future gains. Whether you’re a fan of tech stability or mining momentum, both dividend stocks offer a chance to buy now and reap the rewards later.