Canadian savers are wondering which top TSX dividend stocks might now be undervalued and good to buy for a self-directed Registered Retirement Savings Plan (RRSP) portfolio focused on income and total returns.
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Bank of Montreal
Bank of Montreal (TSX: BMO) trades near $132 per share at the time of writing compared to $149 in February. The stock was recently as low as $124 but has picked up a new tailwind in recent days.
The pullback gives investors who missed the late 2024 rally a chance to buy BMO stock at a discount. Bank of Montreal has a large American business that it built up over the past 40 years through a series of strategic acquisitions.
The US$16.3 billion purchase of California-based Bank of the West in early 2023 hasn’t gone as smoothly as expected due to high provisions for credit losses (PCL) in the past two years. Still, the deal added 500 branches and positioned BMO Harris Bank, the U.S. subsidiary, to benefit from long-term economic growth. Investors who buy Bank of Montreal at the current price can get a dividend yield of 4.8%. The board has paid out a dividend annually for nearly 200 years.
Canadian National Railway
Canadian National Railway (TSX: CNR) is down 6% in 2025 and is off 22% in the past year. The railway giant’s woes are largely due to external events rather than any major issues with the company’s operations. Last year the railway saw a series of disruptions that ranged from wildfires to labour disputes at ports. Severe weather events will probably continue to be a risk, but the other issues that caused grief last year shouldn’t resurface in 2025.
Uncertainty around how U.S. tariffs will impact trade between the United States and its largest trading partners, including Canada, Mexico, and China, is the story in 2025. CN’s rail network of nearly 20,000 route miles runs from the Pacific to the Atlantic in Canada and down to the U.S. Gulf Coast, carrying everything from commodities to car parts and finished goods.
A recession caused by a trade war would impact demand for CN’s services, but the long-term outlook for the company should be solid as economic expansion will eventually continue. CN has a great track record of dividend growth and also returns significant cash flow to shareholders through buybacks.
CNR stock trades near $137 at the time of writing compared to more than $170 a year ago. Investors can currently get a dividend yield of 2.6%.
Telus
Telus (TSX: T) is up more than 7% in 2025 after an extended pullback that saw the share prices slide from $34 in 2022 to below $20 this year. Telus currently trades near $21 and offers a dividend yield of 7.7%.
Price wars for mobile and internet customers put a squeeze on margins in 2024. The government’s move to reduce the number of newcomers to Canada is going to impact the number of new potential subscribers for Canadian communications companies. Regulatory uncertainty is also a cloud that is overhanging the sector.
Telus is arguably a contrarian pick, but there could be some light on the horizon. Price wars should ease this year, and most of the bad news is likely already baked into the stock.
The bottom line on undervalued stocks for RRSP investors
Bank of Montreal, CN, and Telus are solid Canadian companies that currently trade at discounted prices. If you have some cash to put to work in a self-directed RRSP, these stocks deserve to be on your radar.
