When dividend stock prices dip but business fundamentals remain strong, long-term investors have a chance to scoop up high-yielding dividend stocks at a discount. That’s exactly what we’re seeing right now with two top Canadian dividend payers: Power Corporation of Canada (TSX: POW) and Capital Power (TSX: CPX). These dividend stocks both offer strong yields, steady earnings, and valuations that make them look undervalued in today’s market. For income investors, this could be the perfect moment to lock in reliable returns at attractive prices.
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Power
Power Corporation of Canada is a diversified holding company with major interests in financial services, insurance, and wealth management. It owns significant stakes in Great-West Lifeco, IGM Financial, and other related firms, giving it exposure to large pools of recurring income. Even when broader markets become unpredictable, Power continues to deliver stable cash flow. Its diversified business model has helped it weather economic slowdowns, interest rate changes, and market volatility.
As of writing, Power Corporation stock trades at around $52 per share. Its annual dividend comes to $2.60 per share, which translates into a yield of just under 4.7%. That’s well above the average yield on the TSX and reflects the company’s commitment to rewarding shareholders even when earnings fluctuate.
In the most recent quarter, Power reported adjusted earnings per share of $1.07, down slightly from $1.20 the year before. Still, the dividend stock remains profitable, with a payout ratio that’s sustainable and backed by multiple income streams. Its forward price-to-earnings (P/E) ratio sits around 10, making it inexpensive for a company of its size and reliability.
Capital Power
Now let’s look at Capital Power. Based in Edmonton, Capital Power owns and operates power generation facilities across Canada and parts of the United States. It has a growing mix of renewable and gas-fired energy assets, giving it a blend of long-term stability and future growth. While the transition to cleaner energy is still unfolding, Capital Power has positioned itself to benefit from the shift without abandoning the steady returns that traditional power provides.
Shares of Capital Power have dipped about 18% in 2025, even though earnings have remained solid. At a current price near $56 per share and an annual dividend of $2.46, the stock offers a yield of around 4.7%. That’s an eye-catching payout, especially for a dividend stock with a five-year compound annual earnings growth rate above 40%. Even with slower earnings growth in the most recent quarter, Capital Power continues to generate strong cash flow and reinvest in projects that support long-term returns.
Winning pair
What makes both of these dividend stocks stand out right now is valuation. Power Corporation trades at a multiple that doesn’t reflect the strength of its underlying holdings. It’s a stable, profitable business with a long history of dividend payments and a clear path for earnings. Capital Power is in a similar position, offering a rare mix of income and growth at a time when the market seems to be overly focused on short-term risks. And right now, investing $5,000 in each could bring in $464.82 in annual income!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| POW | $52.07 | 96 | $2.45 | $235.20 | Quarterly | $4,998.72 |
| CPX | $55.86 | 89 | $2.58 | $229.62 | Quarterly | $4,972.54 |
For Power, the main risks come from exposure to the financial sector. If markets correct or interest rates move dramatically, earnings could be affected. For Capital Power, regulatory changes and commodity price volatility are ongoing concerns. But both companies have shown resilience in the past. Power’s diversified portfolio helps cushion it from shocks in any one segment. Capital Power’s long-term contracts and mix of energy sources reduce earnings volatility and support dividend sustainability.
Bottom line
For Canadian investors looking for steady income and long-term value, both stocks look like strong buys today. Power Corporation offers a diversified financial foundation with a healthy yield. Capital Power delivers high income and potential for capital appreciation as it expands its clean energy footprint. Together, these offer a blend of stability and growth, all while paying you generously to hold on. That’s the kind of undervalued opportunity worth considering, especially in an uncertain market.
