The S&P/TSX Composite is setting records, which is usually when bargain hunting begins to feel like searching the airport for an $8 sandwich. Cheap stocks still exist, but a low share price alone proves nothing.
Investors seeking cheap stocks need to compare the price with the earnings, cash flow, and assets underneath it, then ask whether the dividend consumes a sensible portion of that cash. A 7% yield can be painfully expensive if the payment gets cut, while a 3.5% yield can be a steal when earnings and dividends have years to grow.
I therefore looked for familiar Canadian dividend stocks carrying either a depressed price or a modest earnings multiple, plus a believable reason today’s problem won’t last forever.
Source: Getty Images
T
TELUS (TSX: T) is the uncomfortable bargain, which is often where the largest discounts live. The telecom sells wireless, internet, health, and digital services, yet weaker guidance and a 55% dividend cut have pushed its shares roughly 42% below their 52-week high.
The reset for TELUS stock lowered the annual dividend to $0.75, still producing a 5.5% yield at $13.53, while targeting a healthier 45% to 60% of trailing free cash flow. Second-quarter free cash flow rose 2% to $545 million, and the lower dividend should save $2.7 billion through 2028 for debt reduction.
Revenue pressure and heavy leverage could keep the shares grumpy, so I would buy TELUS stock gradually. Still, investors are now paying for the bruised telecom after management finally stopped pretending the old payout could do everything.
NTR
Nutrien (TSX: NTR) supplies potash, nitrogen, phosphate, and farm products, so its earnings rise and fall with fertilizer prices, crop economics, and shipment timing. That cyclicality has knocked the shares 23% below their 52-week high, leaving them at about 13.2 times trailing earnings with a 3.4% yield.
The latest quarter missed expectations as lower volumes offset stronger pricing, yet the first half told a better story. Nutrien delivered record potash sales volumes, increased operating cash flow 12%, and returned US$848 million through dividends and buybacks. Management also accelerated repurchases after the quarter, rather helpfully buying when the market sulked.
Fertilizer prices can reverse and farmers can delay purchases, so this won’t move in a polite straight line. For a patient investor, however, owning a low-cost global producer before volumes and sentiment recover can make the messy years unusually productive.
CTC
Canadian Tire (TSX: CTC.A) costs more than $200 per share, proving that “cheap” and “small number” aren’t the same thing. At $206.16, the retailer trades near 15 times 2025 normalized earnings and yields about 3.5%.
Its Canadian Tire, SportChek, Mark’s, Triangle Rewards, and financial-services businesses create the kind of ecosystem that can keep customers returning long after one promotional flyer expires. First-quarter revenue rose 3.3%, while diluted earnings reached $2.02 from $0.67 a year earlier. Management also intends to repurchase up to $400 million of shares by the end of 2026.
Consumer weakness and rising credit losses remain the obvious risks. If earnings confirm the recovery, investors may stop valuing this member of Canada’s blue-chip stocks like a tired retailer and start paying for the earnings machine it is rebuilding.
Bottom line
None of these dividend stocks are risk-free, and I wouldn’t buy all three before lunch. Instead, I would begin building positions before the recovery becomes obvious, because the market rarely sends an engraved invitation when the sale ends.
