1 Undervalued Dividend Stock Canadians Can Buy for 2026

The broad basket of Canadian dividend stocks might not be nearly as cheap as they were just a few months ago, but that’s no reason to stay glued to the sidelines, especially if you’ve got too much cash on hand. It can feel great to have enough dry powder on the sidelines as you prepare for the perfect pitch. But there’s also the risk that you don’t swing the bat on those “good enough” pitches. And that could mean missing out on some percentage in upside before the next big market upset sends stock prices into a level that one would consider a decent entry point.

In short, you can still get a nice hit, even with those somewhat decent pitches thrown your way. And in an era of high food inflation, perhaps the opportunity costs of not swinging are a bit higher.

With the TSX Index holding up quite well amid macro headwinds, geopolitical issues, and somewhat concerning employment numbers, perhaps sticking with Canadian blue chips that pay cash dividends is the best way to go. Whether they continue moving higher with all the momentum behind them or take a 10-15% dive, at the very least, you’ll have the dividend to collect.

The same can’t be said for hoarder of cash, who actually lose some percentage of their purchasing power every year. In a way, it’s almost like a negative dividend or penalty for being a tad too conservative with your allocation. Even if you’re not ready to risk more, I think the lower-beta dividend payers out there could act as great diversifiers for the year.

Without further ado, let’s look at one dividend stock that might be comforting enough to own, even if you’re worried about chasing a stock with a valuation that’s in the fair to mildly pricey range.

Fortis

Just like that, shares of Fortis (TSX:FTS) are above $80 per share. The boring utility stock has gained just shy of 19% in six months, thanks in part to solid results and increased appetite for “safer” dividend payers. While a safety play, like Fortis, could become the new risky trade if the price of admission is too steep, I still view Fortis as a steady mover with some underappreciated tailwinds as we move through the year.

With the firm upping its capital expenditures (by almost $3 billion), the steady utility might just be able to grow its dividend at the higher rate of its expected range over the foreseeable future. Of course, a 6% annual dividend increase, as opposed to a 4% one, might not seem like a great deal. But the annual raises do add up! And with Fortis making smart bets to keep its steady growth engine humming along, I’m inclined to think the 23.6 times trailing price-to-earnings (P/E) multiple isn’t all too frothy after all.

Of course, FTS stock has seldom been this expensive, but given the potential for a continued rotation to defensive dividends, I’d not view the latest rally as anything to hit the panic button over.

Fortis is a great company that might just be worth a multiple closer to 25 times P/E (that’d make a seemingly pricey stock more of an undervalued one). In any case, despite the low beta (0.44) and nice dividend (3.17%), the stock is prone to sliding every few months or so. My game plan? Nibble today, double down on a pullback.

The post 1 Undervalued Dividend Stock Canadians Can Buy for 2026 appeared first on The Motley Fool Canada.

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More reading

• Take Full Advantage of Your TFSA With These Dividend Stars
• 2 Monster Stocks to Hold for the Next 5 Years
• Why Boring Utility Stocks Are Suddenly Looking Very Attractive
• 5 Dividend Stocks That Belong in Almost Every Portfolio
• 4 Secrets of TFSA Millionaires

Fool contributor Joey Frenette has positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.