Best Undervalued Canadian Dividend Stocks in 2023


Investing in undervalued dividend stocks can provide investors with a steady income stream and the potential for significant capital appreciation when the market recognizes the stocks’ true value. However, identifying these undervalued stocks requires a keen understanding of financial metrics and market trends. This article aims to guide you through the process of finding and investing in undervalued Canadian dividend stocks, offering promising additions to your investment portfolio.

What is Undervalued Dividend Stocks

Before we dive into specific stock recommendations, it’s essential to understand what undervalued dividend stocks are:

  • Undervalued Stocks: These are shares of companies that are selling for less than their intrinsic value. The intrinsic value can be calculated using various methods, including discounted cash flow analysis, price-to-earnings (P/E) ratio, and book value among others.
  • Dividend Stocks: These are stocks of companies that distribute a portion of their earnings to shareholders in the form of dividends. Dividend yield, which is calculated as annual dividends per share divided by the price per share, is a common metric to evaluate dividend stocks.

Now, let’s explore some of the undervalued dividend stocks in Canada that offer potential for income and capital appreciation.

Best Undervalued Canadian Dividend Stocks

Please note that the following recommendations are based on current market conditions and thorough analysis. However, the stock market is subject to fluctuations, and thus, investors should conduct their own research or consult with a financial advisor before making any investment decisions.

1. Manulife Financial Corporation (MFC): Manulife is one of Canada’s leading insurance companies and wealth management service providers. Despite its steady growth and high dividend yield, the company’s stock has been trading at a relatively low P/E ratio, indicating that it may be undervalued.

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2. Canadian Natural Resources (CNQ): As one of Canada’s largest oil and gas companies, CNQ has a solid track record of dividend payments. With recent improvements in oil prices and the company’s low P/E ratio, this stock appears to be undervalued.

3. Bank of Nova Scotia (BNS): Despite facing some headwinds due to economic conditions, BNS remains a solid player in the banking sector with a high dividend yield. Its lower P/E ratio compared to its historical average suggests that the stock might be undervalued.

4. Enbridge Inc. (ENB): Enbridge, a leader in the energy transportation sector in North America, offers a high dividend yield. Despite the turmoil in the energy sector, Enbridge’s diversified business model and stable cash flow make it a potentially undervalued stock.

5. TC Energy Corporation (TRP): Another player in the energy sector, TC Energy, has a strong portfolio of assets generating stable cash flows. With a relatively low P/E ratio and a high dividend yield, TRP presents itself as a potential undervalued investment.

Strategies for Investing in Undervalued Dividend Stocks

Conduct Fundamental Analysis:

This involves analyzing a company’s financial statements, industry position, and market conditions to assess its intrinsic value. Key metrics to consider include the P/E ratio, price-to-book (P/B) ratio, debt-to-equity ratio, and dividend payout ratio.

Diversify Your Portfolio:

Don’t put all your eggs in one basket. Diversification helps mitigate risks associated with investing in a single sector or stock.

Patience is Key:

Investing in undervalued stocks often requires patience, as it may take time for the market to recognize the stock’s true value.

Reinvest Dividends:

Consider reinvesting your dividends to buy more shares of the stock, which can significantly enhance your potential returns over the long term due to the power of compounding.


Investing in undervalued dividend stocks can offer a lucrative opportunity to earn a steady income and achieve capital appreciation. However, it requires thorough analysis, patience, and a well-diversified portfolio to mitigate potential risks.

The Canadian market is home to several companies that are currently undervalued but have strong fundamentals and a consistent history of paying dividends. Companies like Manulife Financial Corporation, Canadian Natural Resources, Bank of Nova Scotia, Enbridge Inc., and TC Energy Corporation are prime examples of such investment opportunities.

However, the key to successful investing lies in understanding your financial goals, risk tolerance, and investment horizon. Always conduct your own research or consult with a financial advisor before making investment decisions. Remember, the goal is not just to invest but to invest wisely. With careful planning and strategic decisions, you can make the most of the opportunities offered by undervalued Canadian dividend stocks.

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