2025 was a year of ups and downs for the stock market, but the S&P/TSX Composite Index ended the year on a high note. However, 2026 has kicked off with uncertainties that reflect global events. The impact of the abduction of Venezuela’s president and the ramifications it will have on the global oil industry are still being felt, and it will take time for things to fully register.
As of this writing, the Canadian benchmark index is up by 47.8% from its 52-week low and hovering around new all-time highs. The uptick indicates that most of the market is trading at higher levels, but the TSX has a few stragglers dragging behind the rest of the market.
Today, I will discuss a battered and bruised Canadian dividend stock that might be worth adding to your self-directed portfolio at discounted levels.
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Algonquin Power & Utilities
Algonquin Power & Utilities Corp. (TSX:AQN) is a stock that lagged behind the market last year, but it has been doing so for several years. As of this writing, AQN stock trades for $8.87 per share, down by a massive 59.8% from its March 2020 highs. In the same period, the S&P/TSX Composite Index is up by 136.5%. Such a massive difference can only seem worrying to newer investors.
A quick look at the price chart above might set off all the alarms telling you to avoid investing in it. However, the sustained downturn might only be temporary and hint at an opportunity for value-seeking investors. The dividend stock slashed its payouts and worked through a time of weaker investor confidence.
Despite the reported weakness, its core utility business remained strong and is strong to this day. Its customers pay their bills, and it still operates in a highly rate-regulated market with mostly long-term contracts.
While Algonquin has significant renewable energy operations, the $6.8 billion market-cap company is a utility company first, and then a portfolio project. The company’s management has decided to sell off most of its renewable energy business while retaining hydropower. The move should help it pay down debt and simplify its story. It can also provide a significant boost to its financials in the short term, helping the underlying business improve its bottom line and gear up for a stronger future.
Foolish takeaway
Algonquin Power & Utilities stock pays investors US$0.065 per share each quarter, translating to a 4.1% dividend yield. Despite having cut its payouts, its beaten-down share prices have inflated the yield to attractive levels. If you have been considering investing in a dividend stock that is arguably undervalued and can reliably pay dividends, AQN stock might be a good pick to consider.
Before you invest, it is important to remember that regulatory decisions, interest rate hikes, and other factors can cause short-term volatility. If you can stomach the risks that come with investing, AQN stock can be a good holding to consider for the long run.
