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3 Canadian Dividend Stocks That Are Undervalued and Ready to Soar

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Written by Ambrose O'Callaghan at The Motley Fool Canada

The S&P/TSX Composite Index was down 95 points in early afternoon trading on Thursday, May 18. Some of the worst-performing sectors included battery metals, financials, and utilities. Today, I want to zero in on three Canadian dividend stocks that look undervalued and poised for a rebound in the weeks and months ahead. Let’s jump in.

This Canadian dividend stock in the energy space looks dirt cheap right now

Suncor (TSX:SU) is based in Calgary and operates as an integrated energy company in Canada and around the world. Shares of this dividend stock have dropped 10% month over month at the time of this writing. That has pushed the stock into negative value territory for the year-to-date period. Investors who want to see more can toggle the interactive price chart below.

This company released its first-quarter fiscal 2023 earnings on May 8. Suncor generated adjusted funds from operations (AFFO) of $3.0 billion, or $2.26 per common share — down from $4.09 billion, or $2.86 per common share, in the first quarter of fiscal 2022. Moreover, adjusted operating earnings dropped from $2.05 billion, or $1.54 per common share. Suncor also moved forward with the sale of its wind and solar assets for gross proceeds of $730 million.

Shares of this dividend stock currently possess a very favourable price-to-earnings (P/E) ratio of 6.4. Better yet, Suncor offers a quarterly dividend of $0.52 per share. That represents a strong 5.4% yield.

Here’s another undervalued income yielding equity that looks poised to pop

Brookfield Asset Management (TSX:BAM) is a Brookfield-based company that provides alternative asset management services. Its shares have dropped 4.8% month over month at the time of this writing. The stock is down 2.9% so far in the year-to-date period.

Investors got to see Brookfield Asset Management’s first-quarter fiscal 2023 earnings on May 10. Distributable earnings rose to $563 million compared to $491 million in the first quarter of fiscal 2022. Meanwhile, Brookfield Asset Management has raised $19 billion in the year-to-date period. It is close to meeting the goals for its fifth flagship infrastructure fund. Moreover, it invested $17 billion of capital in the first quarter.

This dividend stock has dropped 4.6% over the past month. Its shares are down 2.7% in 2023. Brookfield Asset Management last declared a quarterly dividend of $0.32 per share, which represents a solid 4% yield.

Why this undervalued Canadian dividend stock belongs in your portfolio today

Nutrien (TSX:NTR) is the third and final dividend stock I’d look to snatch up right now. This Saskatoon-based company provides crop inputs and services and saw its value spike as the Ukraine-Russia conflict disrupted the global agricultural and fertilizer spaces. However, this dividend stock has plunged 16% so far in 2023.

This company unveiled its first-quarter fiscal 2023 earnings on May 10. Nutrien reported potash and nitrogen adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) both reached $676 million in the first quarter of 2023, which was down year on year due to lower net realized selling prices and a dip in overall sales volumes. For the full year, Nutrien now forecasts full-year adjusted EBITDA of $6.5 billion to $8.0 billion, or $5.50 to $7.50 per share.

Shares of this dividend stock currently possess a very attractive P/E ratio of 4.7 at the time of this writing. Meanwhile, it offers a quarterly distribution of $0.53 per share, representing a 3.4%.

The post 3 Canadian Dividend Stocks That Are Undervalued and Ready to Soar appeared first on The Motley Fool Canada.

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Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned.

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