Investing in undervalued stocks that offer you an attractive dividend yield is a good strategy, as you can benefit from a passive income stream as well as capital gains. In this article, I have identified three cheap TSX dividend stocks you can buy right now.
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TSX dividend stock #1
Valued at a market cap of $153 million, Yellow Pages (TSX:Y) pays shareholders an annual dividend per share of $1, which translates to a forward yield of almost 9%. Moreover, the TSX stock has surged 23% in the past year, bringing cumulative gains to 38%.
Yellow Pages Limited delivered encouraging results in Q1, marking the fifth consecutive quarter of improving revenue trends. Revenue declined 7.6% year-over-year to $50.8 million, compared to an 8.1% decrease in the previous quarter, showcasing management’s success in “bending the revenue curve.”
Its digital revenues declined 6.8% while print revenues fell 10.5%, both showing sequential improvement. Key operational metrics continued to advance, including sales force expansion, improved customer retention rates, and higher average customer spending — critical indicators of long-term stability.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) decreased 22.3% to $11.9 million, indicating a margin of 23.4%, which reflects ongoing investments in revenue-generating initiatives.
Yellow Pages ended Q1 with $49 million in cash and reported a net income of $5 million. A focus on small and medium-sized businesses enables Yellow Pages to gain a competitive advantage over other digital advertising platforms.
TSX dividend stock #2
Valued at a market cap of $755 million, MCAN Mortgage (TSX:MKP) pays shareholders an annual dividend of $1.56 per share, indicating a yield of over 8%.
MCAN operates as a specialized Mortgage Investment Corporation, focusing on Canadian residential and commercial mortgages. It targets underserved lending segments, allowing the company to capture high-margin opportunities in construction lending and alternative mortgage solutions. Traditional banks often overlook these verticals due to regulatory constraints or limitations in their business models.
MCAN’s competitive moat centres on its specialized underwriting expertise and proprietary risk management processes. Moreover, it benefits from economies of scale as increased loan volumes drive operational efficiencies in underwriting and servicing activities. Additionally, customer switching costs in mortgage servicing create stable revenue streams and reduce churn rates.
Key growth initiatives include expanding MCAN Capital’s portfolio, which contributes to overall profitability, and growing the higher-margin construction lending business.
MCAN is developing a new IT platform to enhance operational efficiency and enable new product offerings for underserved borrowers.
TSX dividend stock #3
The final TSX dividend stock on my list is First National Financial (TSX:FN), which offers a yield of over 6%. First National Financial delivered a strong performance in Q1 as Canada’s mortgage market rebounded, leveraging its specialized broker-focused strategy to capture market share.
Single-family mortgage originations surged 34% year-over-year while commercial mortgage originations increased 18%, driven by declining interest rates and government housing incentives.
First National benefits from an extensive broker network and flexible underwriting, which allows it to serve market segments that value personalized service over standardized products.
The mortgage lender’s focus on building recurring revenue streams through mortgage servicing and securitization provides sustainable income growth. Further, its expertise in insured multi-unit residential housing positions First National well in Canada’s rental market, which remains resilient despite ongoing demand for affordable housing.
