When everyone is selling, savvy investors look for opportunities — especially in value stocks. In Canada, many of these overlooked gems don’t just offer potential price appreciation but also reliable, growing dividends. That makes them especially appealing when markets are shaky.
By choosing your value stocks wisely, you can set yourself up for rising dividend income that beats inflation and grows your purchasing power over time. Here are three top Canadian value stocks worth considering when others are heading for the exits.
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1. Sun Life Financial: A dividend grower that just dipped
Sun Life Financial (TSX: SLF) has recently taken a hit, dropping more than 11% from around $90. But rather than panic, long-term investors should see this as a chance to buy a quality company at a more attractive price.
Sun Life has a strong track record of dividend growth, averaging 8.4% annually over the last decade. This is backed by a consistent rise in earnings, with adjusted earnings per share growing at a compound annual rate of 8.5% over the same period.
Its dividend remains secure, with a payout ratio of around 48% of estimated adjusted earnings for this year. At around $80 per share, it trades at a reasonable price-to-earnings (P/E) ratio in line with its historical valuation and offers a solid 4.4% dividend yield. With another potential dividend hike expected in November, Sun Life is worth a closer look.
2. Brookfield Infrastructure Partners: Resilient income from global assets
Brookfield Infrastructure Partners (TSX: BIP.UN) is another value opportunity after a recent pullback. The stock’s decline has pushed its distribution yield to an attractive 5.8%, making it a tempting choice for income investors.
BIP has committed to increasing its payout by 5-9% annually, and it has delivered a 10-year distribution growth rate of 7.7%. Its globally diversified portfolio includes essential infrastructure assets — such as utilities, toll roads, data centres, and railways — that generate stable, contracted cash flows regardless of the economic climate.
For patient investors with a long-term horizon, BIP offers a compelling mix of income, stability, and growth potential.
3. Royal Bank of Canada: Wait for a better entry point
Royal Bank of Canada (TSX: RY), the country’s largest bank, is known for its stability and diversified operations in personal banking, wealth management, and capital markets. It typically commands a premium valuation, which means it doesn’t often trade at a discount.
Right now, RBC is not particularly cheap, offering a dividend yield of just 3.3% — below its 10-year average of about 3.8%. Historically, better buying opportunities appear when the stock dips over 10% from its highs or when the dividend yield rises above 4%.
For now, it’s a stock to keep on your radar — and strike when the price is right.
Investor takeaway: Be greedy when others are fearful
As Warren Buffett stated, “Be greedy when others are fearful.”
Keep in mind that market dips are often intertwined with emotional overreactions — and they create the perfect setup for long-term value investing. Companies like Sun Life and Brookfield Infrastructure Partners offer strong fundamentals and reliable dividends, making them smart picks when sentiment turns negative. Keep Royal Bank on your watchlist, and be ready to act when the valuation becomes more compelling.
