1 Magnificent Canadian Dividend Stock Down 55% to Buy and Hold Forever

Valued at a market cap of $2.6 billion, Boralex (TSX:BLX) stock is down 55% from all-time highs. The ongoing drawdown allows you to buy the dip and benefit from an attractive yield of almost 3% in December 2025.

Let’s see if you should own Boralex stock at the current valuation.

Is Boralex stock undervalued right now?

Boralex is a Canadian renewable energy company that develops, builds, and operates power generation and storage facilities across Canada, France, and the United States.

Boralex generates electricity from wind, solar, and hydroelectric resources. It ended 2024 with 103 wind farms, 13 solar facilities, 15 hydroelectric stations, and two storage units, totalling 3,162 megawatts of installed capacity.

Founded in 1982 and headquartered in Kingsey Falls, Canada, Boralex focuses on geographic and technological diversification with emphasis on solar energy and storage expansion.

It generates predictable revenues through feed-in premium and power-purchase agreements, which support consistent EBITDA (earnings before interest, tax, depreciation, and amortization) growth as capacity increases.

Boralex ended the third quarter (Q3) with $288 million in cash and $811 million in total liquidity. The clean energy company recently announced its 2030 Strategy, focused on combining sustainable growth with performance.

Most of its income is stable as 90% of its revenue is tied to long-term contracts. On average, these agreements still have 11 years left, providing the company with a very predictable stream of cash.

Boralex is bullish on rising clean energy demand in Canada. It is also expanding its footprint south of the border and in the United Kingdom. Over the next five years, Boralex plans to double its energy capacity to seven gigawatts by focusing on wind, solar, and battery storage projects.

This growth is backed by a massive eight-gigawatt pipeline of potential projects. A key part of the new strategy is to extend the average contract length from 11 years to 14 years.

Boralex expects its operating income to grow between 12% and 14% annually through 2030. It also aims for a 7% to 9% yearly increase in its core earnings. Boralex will invest $8 billion in this period to develop these projects.

The company emphasized that it will not raise equity capital to fund its expansion plans. Instead, it will leverage debt tied to specific projects and offload minority stakes in existing assets.

Is the dividend stock undervalued?

Analysts tracking Boralex stock forecast revenue to increase from $817 million in 2024 to $1.56 billion in 2029. In this period, earnings are forecast to expand from $0.62 per share to $1.80 per share. Notably, the free cash flow for the Canadian dividend stock is projected to improve from $17 million in 2024 to $435 million in 2028.

A widening cash flow base should enable Boralex to reduce its balance sheet debt, reinvest in growth projects, maintain its dividend payout, and target accretive acquisitions.

If the TSX stock is priced at 25 times forward earnings, it could gain 80% over the next three years. If we adjust for dividend reinvestments, cumulative returns could be closer to 90%.

Investing in undervalued Canadian stocks, such as Boralex, can help you generate a steady stream of dividend income and boost cumulative returns through capital gains.

The company’s five-year plan blends aggressive expansion with risk management, making it a top buy for income and growth investors.

The post 1 Magnificent Canadian Dividend Stock Down 55% to Buy and Hold Forever appeared first on The Motley Fool Canada.

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Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.