The TSX continues to affect new highlights and is expanding its great bouncer from the April rate route. Investors who have missed the rally wonder which Canadian shares can still be undervalued and good to buy for a self -driven tax -free savings account (TFSA) or registered pension saving plan (RRSP) aimed at dividends and total returns.
Canadian National Railway
Canadian National Railway (TSX: CNR) acts almost $ 129 at the time of writing. The share has fallen by 20% in the last 12 months and is far from the $ 180 that it reached at a certain point in 2024.
Labor conflicts at both CN and important ports in 2024 forced customers to find alternative ways to get their products to their destinations. This hit the expected revenue growth and influenced operational efficiency. Wild burning in the summer of 2024 added to the pain. In the end, CN still managed to achieve a small income profit in 2024, but the profit fell compared to 2023.
In the first instance, management expected 2025 to be a lot better, but rates and commercial uncertainty have derailed the projections. CN originally expected a growth from 10% to 15% in adjusted diluted profit per share (EPS) in 2025 compared to last year. In the winning report of the second quarter (Q2) 2025, however, management had to lower the guidelines, with reference to constant economic uncertainty.
Potential consolidation in the American railway sector has added to concern about investors. Union Pacific and Norfolk Southern want to combine to create a seamless East-West rail giant. How this would affect CN is under discussion. Some customers could be lost, but reduced competition can also benefit the remaining rail transporters, who are now working together to form or expand partnerships. CN operates 20,000 route -kilometers of rail that connects the Atlantic and Pacific coasts of Canada with the Gulf Coast of the United States.
Wetwind in the short term is expected, but the long -term prospects for CN must be positive. Trade agreements between the United States and important partners will be resolved and companies will adapt to the rates. Economic growth will continue, and that means that the demand for the services of CN should rise.
CN remains a very profitable company and does a good job to share surplus money with investors through dividend growth and share purchasing. The board has increased the dividend annually over the past 29 years. Investors can currently receive a dividend yield of 2.75%.
Telus
Telus (TSX: T) trades under $ 22 at the time of writing compared to $ 34 in the spring of 2022. The slump has been painful for long -term holders of the shares that TELUS DIP watched at the end of last year as $ 19.
High interest rates caused the initial withdrawal into the share price. The Bank of Canada aggressively increased interest rates in 2022 and 2023 to combat rising inflation. This caused interest charges on loans with variable speed and pushed the loan costs into the bond market. A jump in interest costs reduces profit and reduces money available for debt reduction or payment of dividends, which means that companies such as Telus hurt those major debt positions. Price wars and weaker income from the subsidiary of Telus Digital (Telus International) caused the extension of the decline of the share until the end of 2024.
Bargain hunters started to go back to Telus earlier this year, hope that the worst pain is in the rearview mirror. Things can get better on the way to 2026. The Bank of Canada has just lowered its most important interest and more cuts are probably on the road. The price war for mobile and internet subscribers seems to be over. Telus applies money for non-core assets to pay debts and takes Telus Digital Private.
Investors who buy Telus at the current level can collect a dividend yield of 7.6%.
The Bottom Line
CN and Telus are strong companies that currently act at reduced prices. If you have some money to get to work in a buy-and-hold dividend portfolio, these shares deserve to be on your radar.
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