Retirees and other dividend investors have an opportunity to buy some top Canadian dividend stocks at discounted prices for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio.
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Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is Canada’s largest oil and natural gas company, with a current market capitalization of $82 billion. The company’s size gives it the financial firepower to make large strategic acquisitions to boost production and reserves. CNRL’s US$6.5 billion purchase of Chevron’s Canadian assets late last year is a good example. The deal added roughly 122,500 barrels of oil equivalent per day (BOE/d) production for 2025 and included oil sands, conventional light oil, and natural gas output. CNRL also picked up significant proven and probable reserves.
CNRL raised the dividend by 7% when it announced the acquisition. That was the second increase in 2024. In 2025, the board already raised the payout again, marking the 25th consecutive annual dividend hike.
The dividend increases suggest the company isn’t concerned about the decline in the share price or the outlook for profits. CNRL’s stock is down 24% in the past 12 months. This is largely due to lower oil prices, although some of the pressure might also be the result of investors being concerned about the company taking on extra debt to make the Chevron Canada acquisition.
West Texas Intermediate (WTI) oil trades below US$60 per barrel at the time of writing compared to US$83 last summer. CNRL says its WTI breakeven is in the US$40 to US$45 range, so it still generates decent margins in the current market conditions. The impact on profits, however, remains significant on a US$20 per barrel difference.
Investors will need to be patient. Oil markets are expected to be in a surplus position through 2025 and into next year. That being said, you get paid a solid 6% dividend yield right now to ride out the turbulence. At some point, the energy market will rebound.
Telus
Telus (TSX:T) trades near $21 per share at the time of writing compared to more than $30 three years ago. The extended pullback initially occurred as a result of rising interest rates. Telus and other communications companies use a lot of debt to fund capital programs that include the updating and expansion of wireless and wireline networks. The steep rise in interest rates in 2022 and 2023 drove up debt expenses. This reduces profits and cuts into cash that can be used for distributions or debt reduction.
Rate cuts in 2024 should have sparked a rally, but Telus had some other issues. Its Telus Digital subsidiary, formerly Telus International, struggled with declining revenues. In Canada, price wars for mobile and internet customers reduced margins. Lower immigration is also putting pressure on subscriber growth.
At this point, the worst of the price war appears to be over, with most competitors now charging more for plans. Interest rates will likely continue to decline later this year. Low immigration, however, will persist over the medium term, and an economic downturn could put pressure on sales of new mobile devices.
Headwinds remain, but most of the bad news is probably priced into the stock at this point. Investors who buy Telus at the current level can get a dividend yield of 7.7%.
The bottom line on cheap dividend stocks
CNRL and Telus trade at discounted prices and pay good dividends with high yields. If you have some cash to put to work in a portfolio focused on dividend income, these stocks deserve to be on your radar.
