August saw a mixed bag of hits and misses this earnings season due to tariff-induced trade declines and domestic growth pumped by the Bank of Canada’s interest rate cuts. Canadian companies hit by tariffs resorted to cost-cutting measures, while those with high leverage used the rate cuts to reduce debt. In either case, stock prices reacted accordingly. This uncertainty and chaos have created an opportunity for patient investors to buy dividend stocks at beaten-down prices and hold them for years to come.
Three beaten-down dividend stocks to buy in August
The right beaten-down stocks can generate significant passive income for those who stay invested.
Canadian National Railway
Canadian National Railway (TSX:CNR) stock is trading near its 2021 low of $128.08 after falling 15% from its May 16, 2025 high of $156. Behind the dip is the impact of tariffs on its trade mix. CNR earns freight revenue by transporting various goods, including petroleum and chemicals, forest products, grain and fertilizers, coal, automotive products, metals, and minerals via its rail route. In the second quarter, weakness in international trade offset growth in domestic trade, leading to a 1% year-over-year decline in revenue.
Lower trade volumes amid macro and tariff overhangs created uncertainty. Hence, the railway company reduced its adjusted diluted earnings per share (EPS) guidance for 2025 from 10–15% to mid-to-high single-digit growth. The company reduced its capital spending to reflect the trade volumes.
These volumes will continue to be affected by tariffs in the short term. However, it could see growth once the macro situation stabilizes and volumes pick up. Until then, CNR has stable free cash flow to pay dividends and buy back shares.
The 15% dip has created an opportunity to buy CNR stock and lock in a 2.8% dividend yield. Although the yield may not look attractive at the moment, the company’s 20-year dividend growth history shows that staying invested can grow your passive income by 5–10% annually.
Canadian Tire stock
When international waters are chaotic, a good strategy is to invest in domestic stocks. Canadian Tire (TSX:CTC.A) stock has slipped 13.7% after it announced slightly weaker second-quarter EPS due to discontinued operations and higher expenses for its True North transformative growth strategy. Under the strategy, the retailer has spent around $116 million of operating capital expenditure on the enhancement of 21 stores.
The retailer also acquired the intellectual property rights of the Hudson’s Bay Company for about $30 million. It will revamp Hudson’s Bay in the fourth quarter. All these expenses could stress Canadian Tire’s EPS in the short term while the transformation is underway. The strategy will focus on:
- improving customer experiences
- expanding the Triangle Rewards loyalty system
- personalized, data-driven customer relationships
- tech-driven operational efficiency.
If the strategy succeeds, it could improve EPS in the long term and drive dividends per share. Now is a good time to buy Canadian Tire at the dip and lock in a 4.3% annual dividend yield. For a better outcome, consider opting for the dividend reinvestment plan (DRIP), which will give you more income-generating stocks instead of cash, thereby compounding your returns.
Telus stock
Telus Corporation (TSX:T) stock has recovered from the first wave of tariffs (March 10 to April 4, 2025), rising 15% in four months. You cannot call Telus a beaten-down stock because its share price is less volatile. The telecom operator has left the worst behind and is now on the path to recovery.
The regulatory change that gave competitors access to network infrastructure diluted the return on infrastructure investments. However, the company reduced its capital expenditure and is now focusing on reducing its debt. These efforts increased its second-quarter free cash flow by 11% year-over-year to $535 million, bringing its dividend payout ratio to 75%, in line with the long-term target of 60–75%.
It is a good stock to invest in and lock in a 7.4% yield. You can also compound the passive income with a DRIP and 3-8% dividend growth in the next three years.
