Although the market has performed reasonably well this year, most investors’ attention has been drawn to high-growth momentum stocks. However, for long-term investors, this “attention bias” offers a window to buy quality companies at reasonable prices. The following five Canadian stocks, with solid fundamentals, reliable dividends, and currently undervalued by the market, deserve closer attention.
Telus: The Beaten-Down Telecom with a High Yield
Canada’s telecom sector has long been known for its defensive appeal and stable dividends. But persistently high interest rates have put pressure on these capital-intensive businesses, with the market focusing more on short-term challenges than long-term value. Take Telus (TSX:T) for example. The stock’s pullback has pushed its dividend yield toward double digits. At the same time, Telus continues to generate strong recurring revenue from its core segments, and its technology subsidiary, Telus International, offers a growth avenue that the market is currently discounting. While waiting for a valuation recovery, investors can enjoy the telecom’s 9.7% yield.
Bank of Nova Scotia: A Turnaround Story Hiding in Plain Sight Among the Big Banks
Bank stocks are rarely considered “cheap,” but Bank of Nova Scotia (TSX:BNS) has lagged its big bank peers for years. One reason is that its international exposure to higher-risk emerging markets led to inconsistent performance. Recently, Scotiabank has shifted its strategic focus away from those emerging markets to more mature North American markets. This transition won’t happen overnight, but the stock price has yet to fully reflect this positive change. As a result, Scotiabank remains the lowest-valued among the Big Five banks and offers the highest dividend yield.
Suncor: A Cash-Rich Energy Stock the Market Overlooks
Suncor (TSX:SU) has experienced operational setbacks and inconsistent performance over the past few years, but recent signs of improvement suggest the company has turned a corner. Strong oil prices are supporting cash flow, and management is using that cash to buy back shares and raise dividends. The current dividend yield stands at 2.8%. Among energy stocks, Suncor stands out as a value pick, thanks to its robust cash flow and shareholder return policies.
Restaurant Brands International: The Global Fast-Food Powerhouse Expanding Worldwide
Restaurant Brands International (TSX:QSR) owns well-known fast-food brands such as Tim Hortons, Burger King, and Popeyes. The company is investing heavily in store modernization and digital initiatives to support long-term growth and further international expansion. Despite its growing global footprint and improving fundamentals, the current valuation does not fully reflect its substantial earnings potential. As modernization efforts continue to pay off, the stock could see a meaningful revaluation over the long term.
Brookfield Asset Management: An Underrated Compounder
Brookfield Asset Management (TSX:BAM) is a leading global alternative asset manager, generating stable fee-based revenue across infrastructure, real estate, renewable power, and private equity. Even in this high-interest-rate environment, the company has continued to raise capital and expand its global platform. Yet the stock still trades below what most consider its intrinsic value, offering a timely entry point for long-term investors.
Conclusion: Wait for a Sentiment Shift, Long-Term Gains Await
The five companies mentioned above share a common characteristic: solid fundamentals paired with valuations that do not yet reflect their long-term potential. Once market sentiment shifts from chasing high growth back to value, these stocks are poised to deliver significant excess returns. For investors looking to build a diversified portfolio, Telus, Scotiabank, Suncor, Restaurant Brands International, and Brookfield Asset Management are all “hidden champions” worth holding as core positions.
