The TSX just hit a new all-time high, rebounding from the initial shock of U.S. tariffs. Investors who missed the bounce are wondering which top Canadian stocks still might be undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) focused on dividends.
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Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is down 18% over the past 12 months. The pullback is largely due to falling oil prices.
West Texas Intermediate (WTI) oil trades near US$62 per share at the time of writing compared with US$80 last year. The decline in 2024 was primarily due to weak demand in China and higher production from non-OPEC countries, including the United States and Canada. In 2025, the extended slide in oil prices, which took WTI as low as US$57 in recent weeks, can be blamed on recession fears in the United States and further economic damage in China as a result of tariffs.
Near-term volatility should be expected, but contrarian investors can take advantage of the weakness to buy CNQ stock while it is out of favour. The company says its WTI breakeven price level is about US$40 to US$45 per barrel. CNRL is also a major natural gas producer. Prices for natural gas are higher than they were for most of last year, so this is helping offset the margin hit in the oil segment. CNRL is also producing more oil and natural gas to boost revenue.
The board raised the dividend twice in 2024 and already increased the payout once in 2025, extending the dividend-growth streak to 25 years. Investors who buy CNQ stock at the current level can get a dividend yield of 5.5%.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) has been on an upward trend for the past month, but the stock is still down about 7% in 2025.
The bank is working through a strategy transition that will focus more capital investment on the United States and Canada over the medium term and less on Latin America, where previous leadership over the past 20-30 years spent billions on acquisitions to build a large presence in the region.
Last year, Bank of Nova Scotia spent US$2.8 billion to acquire a 14.9% stake in KeyCorp, a U.S. regional bank. Earlier this year, Bank of Nova Scotia sold its operations in Colombia, Panama, and Costa Rica and took a charge of about $1.3 billion on the deal. This might be the reason the stock pulled back aggressively in the first quarter of the year. Recession fears due to U.S. tariffs on Canada and Mexico, where Scotiabank has large operations, added to the pain.
It will take some time for the turnaround program to deliver results. Additional asset sales in Latin America are possible, and investors will need to keep an eye on the pricing of any deals that occur. Despite the uncertainty, the stock is probably still oversold.
Bank of Nova Scotia remains very profitable and has a solid capital position to make strategic investments in the United States and Canada. Investors who buy BNS stock at the current level can get a dividend yield of 5.9%.
The bottom line on top TSX dividend stocks
CNRL and Bank of Nova Scotia pay good dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.
