2 Undervalued Dividend Stocks Canadians Can Buy for 2026

Market turbulence could stay heightened for the rest of 2026. Of course, a choppy January and the start of February don’t necessarily mean investors are in for more wooziness. With some big-name market strategists’ warnings about the potential for a dip, though, there are reasons to proceed forward with caution, especially as investors grow warier of fat AI spending plans and nervous about firms that might be caught flat-footed amid the rise of agentic platforms.

When you consider the hot run we’ve had (especially with the TSX Index), it feels like it’s time to hit the pause button, maybe sell a few shares, and go away for a little while, perhaps once the mega-cap tech titans show signs of leadership again. In the meantime, I think the rotation could get a lot more vicious as investors dump tech, AI, beta, and growth for value, defensiveness, low betas, and dividends.

In this piece, we’ll check in on a pair of cheap income stocks that Canadian investors might wish to add to their watchlists as tech rocks the broad markets while pushing some to get back into the boring names, which are actually doing a great job of holding up the broader markets.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) may very well be the last of the Big Six bank stocks to command a yield north of the 4% mark. And while shares have been heating up, I still wouldn’t look to dump the stock to lock in a big profit. Why? The dividend is still poised to grow as earnings march higher. And as things look up for international banking, I think there’s room for Bank of Nova Scotia to close the valuation gap (at least by a bit) with some of its larger peers that aren’t as internationally diversified.

Of course, time will tell when the international banking business can move into high gear. Either way, shares look fairly priced at 18.2 times trailing price-to-earnings (P/E). While Bank of Nova Scotia isn’t my favourite big bank, I do find the yield to be a main attraction. Compared to most other 4%-yielders, many of which lack upside momentum, BNS shares really do stand out.

Enbridge

The TSX Index exploded higher last year, crushing the S&P. But Enbridge (TSX:ENB) was a relatively mild performer, chopping in both directions going into 2026. More recently, shares have been heating up, gaining close to 7% year to date, or around 13% from January’s lows. Could the latest spike be the start of a sustained march to $100 per share? It’s hard to tell, but the company has the right catalysts in place.

Of course, shares are a tad on the frothy side now at more than 27 times trailing P/E. Despite the mild premium, I’m a huge fan of the growing 5.55%-yielding dividend. It’s not only outsized, but it’s also positioned for serious (likely double-digit percentage) growth over the foreseeable future. Arguably, the pipeline play is the best dividend growth play to stash away for decades, given it always finds a way to move the needle higher on cash flows over time.

The post 2 Undervalued Dividend Stocks Canadians Can Buy for 2026 appeared first on The Motley Fool Canada.

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More reading

• The Best Canadian Dividend Stocks to Buy and Hold Forever in a TFSA
• Income Investors: These Canadian Companies Are Raising Payouts Again
• 3 Dividend Stocks Every Canadian Should Own
• TFSA: Invest $14,000 in This TSX Stock and Create $784 in Annual Passive Income
• 2 Top Canadian Dividend Stocks to Buy on a Pullback

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Bank of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy.