Buy the Fear: 2 Canadian Stocks Worth a Closer Look

Fear can create strange bargains. Investors often run from a stock when the headlines look ugly, even if the business still owns valuable assets and keeps producing cash. That doesn’t mean every beaten-down name deserves a buy. Some stocks fall for good reason.

But when the market prices a company as if its problems will last forever, patient investors can sometimes find strong long-term opportunities. The key is looking for essential businesses, realistic dividends, improving cash flow, and valuations that already reflect plenty of bad news.

BCE

BCE (TSX:BCE) is a perfect example of a stock carrying some bruises. The company provides wireless, internet, television, business communications, fibre, and media services. That gives the company a defensive base, even when sentiment around telecom stocks weakens.

The fear around BCE stock makes sense. In 2025, the company cut its dividend sharply, reducing its quarterly payout from $0.9975 per share to $0.4375 per share. Income investors hated that move, and fair enough. BCE stock built much of its reputation around its dividend. But the cut also reset expectations. Instead of stretching to protect an overly large payout, BCE now has more room to protect cash, invest in its network, and manage debt.

In the first quarter of 2026, BCE stock reported operating revenue of $6.2 billion, up 4% from the year before. Service revenue rose 3.4% to $5.4 billion, while product revenue climbed 7.9% to $818 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 2.9%, and free cash flow edged higher to $804 million from $798 million. Adjusted net earnings fell 7% to $589 million, and adjusted earnings per share dropped 8.7% to $0.63.

And now, the valuation looks more interesting after the reset. BCE stock recently traded around 5 times earnings, with a forward yield near 5.4%. That’s still attractive, but no longer wildly high in a way that screams danger. The smaller dividend could prove healthier over time. If investors start to believe the worst is behind it, the stock could recover from today’s low expectations.

REI

RioCan REIT (TSX:REI.UN) offers a different kind of fear trade. The trust owns retail and mixed-use properties, mostly in major Canadian urban markets. Its tenants include grocers, pharmacies, restaurants, service businesses, and other everyday retailers. That makes RioCan very different from the old empty-mall story investors sometimes imagine when they hear “retail real estate.”

The market has still punished real estate investment trusts (REIT) because interest rates remain a major concern. Higher rates can raise debt costs, lower property values, and make income stocks less attractive compared with bonds. But RioCan’s property-level numbers look stronger than the unit price suggests. In 2025, commercial same-property net operating income grew 3.6%. Retail occupancy reached 98.5%, and new leasing spreads hit 37.3%. Those numbers show tenants still want RioCan’s space.

The first quarter of 2026 kept that theme going. RioCan reported core funds from operations (FFO) of $0.39 per unit, flat from the year before. Commercial same-property net operating income rose 4.7%, and blended leasing spreads came in at 25.8%. Management also reaffirmed 2026 core FFO guidance of $1.60 to $1.62 per unit. That gives investors a clear earnings base to compare with the payout.

The distribution looks covered, too. RioCan pays an annualized distribution of $1.16 per unit, giving it a yield around 5.4%. RioCan also had $1.5 billion of liquidity and $9.2 billion of unencumbered assets at the end of 2025. Risks remain, especially rates, refinancing costs, development spending, and consumer weakness. But high occupancy and strong leasing spreads suggest the business still has momentum.

Bottom line

BCE stock and RioCan both come with baggage. That’s what creates the opportunity. BCE stock gives investors a telecom reset with essential assets, a smaller dividend, and steadier cash flow. RioCan gives investors retail real estate income backed by high occupancy and covered distributions. And a $7,000 investment could create ample income for investors.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTBCE$32.97212$1.75$371.00Quarterly$6,989.64REI.UN$21.24329$1.16$381.64Monthly$6,987.96

Now, neither stock guarantees a smooth ride. But for investors willing to buy fear instead of chase excitement, both deserve a closer look before confidence returns.

The post Buy the Fear: 2 Canadian Stocks Worth a Closer Look appeared first on The Motley Fool Canada.

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More reading

• What’s Going On With BCE’s Dividend?
• 1 Canadian REIT for an Income Portfolio That Holds Up in Any Market
• 5 TSX Dividend Stocks Yielding 3% to 5% for Steady Cash Flow
• Why I’d Choose This Dividend Stock Over Telus or BCE Any Day
• How Splitting $30,000 Across Three TSX Stocks Could Generate $1,945 in Annual Dividends

Fool contributor Amy Legate-Wolfe 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.