Dividend investing turns into way more rewarding if you should purchase a great enterprise when it falls out of favour with the market, making it look undervalued. As well as, a weaker share value can carry the dividend yield and create a greater entry level if the corporate’s underlying enterprise nonetheless seems to be wholesome.
On this article, I’ll spotlight two undervalued dividend shares in Canada that supply enticing yields and have enterprise traits that might assist stronger long-term returns.
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OpenText inventory
OpenText (TSX:OTEX) might be a gorgeous beaten-down Canadian dividend inventory immediately whose latest working efficiency seems to be a lot stronger than its share value suggests.
The Waterloo-based know-how agency offers info administration software program and companies to companies, governments, and different organizations. OTEX inventory is down 19% yr to this point and sits about 36% beneath its 52-week excessive. With this, it presently trades at $36.02 per share with a market cap of $8.7 billion. At this market value, it gives a 4.3% annualized dividend yield.
That share-price weak spot contrasts with OpenText’s robust financials. Within the fourth quarter of its fiscal yr 2026 (led to June), the corporate’s income inched up 2.9% yr over yr (YoY) to US$1.4 billion. Cloud income climbed 6% YoY to US$503 million, marking one other quarter of natural cloud development, whereas its enterprise cloud bookings jumped over 24%.
Its profitability within the newest quarter improved at an excellent quicker tempo, with the corporate’s adjusted EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortization) surging 14.1% YoY to US$506.7 million. The enterprise additionally generated US$185.8 million in working money circulate through the quarter, up 17.5% from a yr in the past.
Including to the optimism, OpenText is now specializing in extra funding in synthetic intelligence (AI), cloud, safety, gross sales capability, and ecosystem partnerships.
With strong money era, enhancing cloud momentum, and the inventory buying and selling effectively beneath its 52-week excessive, OTEX seems to be like a gorgeous mixture of worth and dividend earnings proper now.
Cogeco Communications inventory
For traders searching for an excellent larger yield, Cogeco Communications (TSX:CCA) gives one other undervalued dividend alternative.
Briefly, this Montréal-based firm offers web, video, wi-fi, and wireline cellphone companies throughout Canada and the USA. CCA inventory is presently off 22% from its 52-week excessive, buying and selling at $60.73 per share with a market cap of $2.6 billion. The inventory now gives a robust 6.6% annualized dividend yield.
Within the third quarter of its fiscal yr 2026 (led to Might), Cogeco’s income fell 4.5% YoY to $724.2 million as weak spot within the American telecommunications enterprise outweighed development in Canada. The corporate’s adjusted EBITDA additionally slipped 2.9% from a yr in the past, once more reflecting stress from the U.S. operations.
The Canadian enterprise, nevertheless, continued to maneuver in the suitable path as Cogeco’s Canadian income confirmed YoY enchancment, whereas adjusted EBITDA within the section additionally climbed 3.9%. Extra importantly, the agency’s adjusted revenue attributable to homeowners climbed 29.2%, and adjusted earnings rose to $3.10 per share.
Throughout the quarter, the enterprise generated $170.7 million in free money circulate, up 15.7% YoY, helped primarily by decrease monetary bills and decrease acquisition, integration, restructuring, and different prices. Inspired by these outcomes, Cogeco raised its quarterly dividend by 7% to $0.987 per share.
Though the corporate is making an attempt to win its place within the U.S. amid intense competitors, its Canadian operations stay resilient, wi-fi gross sales proceed to develop, and administration is working to enhance effectivity and optimize capital spending.
With a 6.6% dividend yield and a inventory value nonetheless below stress, CCA might be a gorgeous earnings inventory for traders keen to attend for a broader restoration.
