1 Canadian Dividend Stock Down 38% to Hold Forever

After a stock delivers years of impressive returns, we all feel like we’ve missed our chance. But the market has a way of creating second chances. Sometimes, even high-quality stocks could see their shares pull back sharply, giving long-term investors another opportunity to buy into a strong business.

Lundin Gold (TSX:LUG) seems like a good example on the TSX today. Despite trading roughly 38% below its 52-week high, the company continues to benefit from strong gold prices, impressive operating results, and a growing pipeline of future projects. Add an attractive dividend into the mix, and its stock looks even more interesting.

In this article, I’ll highlight why Lundin Gold still looks like a top Canadian dividend stock to buy and hold despite its recent decline.

Why the recent pullback deserves attention

If you don’t know it already, Lundin Gold is a Vancouver-based company that owns the Fruta del Norte gold mine in Ecuador, one of the highest-grade operating gold mines in the world.

LUG stock currently trades at $76.73 per share with a market cap of $18.5 billion. It also offers an attractive 7.1% annualized dividend yield through quarterly payouts.

Although its shares have gained 16% over the last year and more than 404% over the last three years, the stock is still trading about 38% below its 52-week high. For long-term investors, that disconnect between the share price and the company’s operating performance could create an attractive buying opportunity.

Record earnings continue to support the investment case

Despite the recent weakness in its share price, Lundin Gold’s business performance looks strong as it delivered an impressive start to 2026.

In the first quarter, the company’s revenue jumped 59% YoY (year-over-year) to US$567 million, supported by record realized gold prices and solid operating performance at Fruta del Norte.

On the profitability side, its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed 75.5% from a year ago to US$424 million, while adjusted earnings rose 77% YoY to US$1.13 per share. The company also generated a record US$349 million in free cash flow and ended the quarter with US$703.6 million in cash and cash equivalents while remaining debt-free.

Interestingly, higher gold prices also pushed Lundin’s cash operating costs and all-in sustaining costs higher because of increased royalty payments and statutory profit sharing.

Growth plans are still moving forward

Strong financials are only part of the reason this top Canadian dividend stock remains attractive. Lundin Gold’s latest operational update also highlighted the strength of its mining business. In the second quarter, the company produced 119,000 ounces of gold despite completing nine days of planned plant maintenance. Higher-grade mining areas and stronger throughput toward the end of the quarter helped maintain production, and management reaffirmed its full-year production guidance of 475,000 to 525,000 ounces.

Beyond current production, Lundin Gold continues to invest heavily in future growth. The company is advancing early-stage development at the Fruta del Norte South deposit while also progressing its mine-to-mill expansion study, which is evaluating opportunities to increase processing capacity.

At the same time, the gold miner is carrying out the largest exploration program in its history with 133,000 metres of planned drilling. The program is mainly focused on extending the mine life around existing operations while also testing new exploration targets across its prospective land package.

Why I’d hold this stock for the long run

Lundin Gold continues to balance rewarding shareholders today while investing for tomorrow. The company recently declared a quarterly dividend of US$1.21 per share, reflecting both its fixed dividend and a variable payout supported by strong free cash flow.

With record cash generation, a debt-free balance sheet, an expanding growth pipeline, and one of the highest dividend yields among major Canadian mining stocks, Lundin Gold looks like an amazing stock to buy now and hold forever, especially after its recent 38% decline from its 52-week high.

The post 1 Canadian Dividend Stock Down 38% to Hold Forever appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar 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.