As the Canadian stock market remains volatile in 2025, following a strong performance last year, many investors may wonder whether now is the right time to buy, sell, or wait. Market pullbacks, however, often present great buying opportunities for long-term investors, especially for dividend stocks with strong fundamentals and reliable cash flows.
For those looking to take advantage of recent market uncertainty amid growing global trade tensions, I’ve identified two top Canadian dividend stocks that are trading at attractive levels. These companies offer strong yields and attractive long-term upside, making them great buys on the dip right now. Let’s take a closer look.
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Capital Power stock
The first stock that you may consider buying on a pullback in early 2025 is Capital Power (TSX: CPX). This Edmonton-headquartered independent power producer has a growing portfolio of renewable and thermal power generation facilities across North America.
CPX stock currently trades at $53.08 per share with a market cap of $7.4 billion. At this market price, it also offers a 4.9% annualized dividend yield. Lately, the stock has seen some volatility, with a 16.7% decline so far in 2025, but it remains up 41.4% over the past year.
Despite the short-term dip, Capital Power’s long-term trajectory remains strong due mainly to its robust financials. In the third quarter of 2024, the company generated $401 million in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) and $315 million in adjusted funds from operations. Notably, its U.S. assets contributed over 50% of its adjusted EBITDA, highlighting the strength of its geographic diversification strategy.
Capital Power plans to expand its renewable footprint with the Halkirk 2 Wind project as it continues to focus on improving its energy storage solutions portfolio. Its recent integration of Harquahala and La Paloma power plants further strengthens its position in the U.S. market. With a record quarterly power generation of 11 terawatt-hours and its most recent 6% dividend increase, CPX remains a great stock to buy on the dip for long-term income investors.
Topaz Energy stock
Another solid Canadian dividend stock to buy on a pullback is Topaz Energy (TSX: TPZ). While Capital Power offers stability in the renewable energy space, Topaz provides a compelling opportunity in the oil and gas sector with a stable royalty and infrastructure business model.
Currently trading at $25.50 per share, TPZ stock has a market cap of $3.9 billion and an annualized dividend yield of 5.1%. After ending 2024 with solid 44% gains, the stock has slid by 8.4% so far in 2025.
Although broader market volatility has pressured its stock this year, Topaz had a strong 2024 as it achieved record liquids production and 11% higher year-end royalty production. As a result, the company generated $73.9 million in cash flow in the fourth quarter while maintaining an impressive 87% free cash flow margin.
Topaz is gradually expanding its royalty acreage and investing in infrastructure assets that generate stable, fee-based revenue. With a disciplined capital strategy and a sustainable dividend, this Canadian dividend stock could deliver long-term returns, making it an attractive buy during market dips.
