Dividend investing becomes much more rewarding if you can buy a good business when it falls out of favour with the market, making it look undervalued. In addition, a weaker share price can lift the dividend yield and create a better entry point if the company’s underlying business still looks healthy.
In this article, I’ll highlight two undervalued dividend stocks in Canada that offer attractive yields and have business trends that could support stronger long-term returns.
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OpenText stock
OpenText (TSX: OTEX) could be an attractive beaten-down Canadian dividend stock today whose recent operating performance looks much stronger than its share price suggests.
The Waterloo-based technology firm provides information management software and services to businesses, governments, and other organizations. OTEX stock is down 19% year to date and sits about 36% below its 52-week high. With this, it currently trades at $36.02 per share with a market cap of $8.7 billion. At this market price, it offers a 4.3% annualized dividend yield.
That share-price weakness contrasts with OpenText’s strong financials. In the fourth quarter of its fiscal year 2026 (ended in June), the company’s revenue inched up 2.9% year over year (YoY) to US$1.4 billion. Cloud revenue climbed 6% YoY to US$503 million, marking another quarter of organic cloud growth, while its enterprise cloud bookings jumped over 24%.
Its profitability in the latest quarter improved at an even faster pace, with the company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) surging 14.1% YoY to US$506.7 million. The business also generated US$185.8 million in operating cash flow during the quarter, up 17.5% from a year ago.
Adding to the optimism, OpenText is now focusing on more investment in artificial intelligence (AI), cloud, security, sales capacity, and ecosystem partnerships.
With solid cash generation, improving cloud momentum, and the stock trading well below its 52-week high, OTEX looks like an attractive combination of value and dividend income right now.
Cogeco Communications stock
For investors looking for an even higher yield, Cogeco Communications (TSX: CCA) offers another undervalued dividend opportunity.
In short, this Montréal-based company provides internet, video, wireless, and wireline phone services across Canada and the United States. CCA stock is currently off 22% from its 52-week high, trading at $60.73 per share with a market cap of $2.6 billion. The stock now offers a strong 6.6% annualized dividend yield.
In the third quarter of its fiscal year 2026 (ended in May), Cogeco’s revenue fell 4.5% YoY to $724.2 million as weakness in the American telecommunications business outweighed growth in Canada. The company’s adjusted EBITDA also slipped 2.9% from a year ago, again reflecting pressure from the U.S. operations.
The Canadian business, however, continued to move in the right direction as Cogeco’s Canadian revenue showed YoY improvement, while adjusted EBITDA in the segment also climbed 3.9%. More importantly, the firm’s adjusted profit attributable to owners climbed 29.2%, and adjusted earnings rose to $3.10 per share.
During the quarter, the business generated $170.7 million in free cash flow, up 15.7% YoY, helped mainly by lower financial expenses and lower acquisition, integration, restructuring, and other costs. Encouraged by these results, Cogeco raised its quarterly dividend by 7% to $0.987 per share.
Although the company is trying to win its place in the U.S. amid intense competition, its Canadian operations remain resilient, wireless sales continue to grow, and management is working to improve efficiency and optimize capital spending.
With a 6.6% dividend yield and a stock price still under pressure, CCA could be an attractive income stock for investors willing to wait for a broader recovery.
