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Investing in high-quality shares that act with a reasonable appreciation is a proven strategy for generating market-knocking returns. In this article I have identified such a dividend-paying TSX shares that you can now buy and hold with only $ 500.
Valued on a market capitalization of $ 1.23 billion, Trican Well Service (TSX: TCW) is a TSX dividend share that has risen more than 400% in the last five years. Despite the large return, it also pays shareholders a tasty dividend yield of 3.7%.
Trican Well Service offers equipment, products and technology for oil and gas-pit activities throughout Canada. It offers cementing solutions for different pits, hydraulic fracture services, including specialized liquids and additives, rolled -up buzzards for milling and product improvement and fabricated treatments to restore good performance.
Trican serves the drilling, completion, stimulation and rework phases of oil and gas development and also sells chemical products to the industry.
Is this TSX share a good purchase at the moment?
Trican Well Service yielded solid results on the second quarter that exceeded expectations. In the quarter of June it reported a turnover of $ 213.8 million, with adapted EBITDA (profit before interest, taxes, depreciation and amortization) of $ 45 million, which indicates a margin of 21%, an increase of 19% in the same quarter last year. The Canadian Oilfield Services Company generated a positive income of $ 19.5 million or $ 0.11 per share and reported a strong free cash flow of $ 24.4 million in the second quarter (Q2).
Despite the fact that he is confronted with some price pressure due to historically low natural gas prices, Trican maintained fixed margins through cost management initiatives. The removal of CO2 taxes and increased internal transport helped to compensate for cost increases in areas such as cement prices. The focus of the company on the Montney, Duvernay and Deep Basin Plays continues to stimulate the performance in all three business divisions.
Trican announced plans to use 100% defects on natural gas spread by next year, a total of $ 40 million in capital investments for an eighth incremental spread. This technology -preface corresponds to its strategy to reduce the completion costs of customers and at the same time improve environmental performance.
Management expressed optimism about prospects in the short term, since LNG Canada rises to two billion cubic foot a day of export, which must support natural gas prices. Various customers have already started discussions about next year’s availability and completion programs, making a strong visibility in the future.
Is the dividend stock still undervalued?
Analysts keeping the TSX sharing forecast forecasts to grow from $ 0.54 per share in 2024 to $ 0.80 per share in 2027. During this period, the free cash flow of $ 137 million to $ 178.5 million is estimated.
Given an annual dividend of $ 0.21 per share in 2025, the dividend costs of Trican are almost $ 45 million, indicating a payment ratio of less than 40%. Wall Street expects the TSX dividend share to increase its payment to $ 0.24 per share due to an increasing cash current base.
Trican shares are currently acting on a forward price gain several of 9.6 times, which is reasonable. If it continues to act with a similar multiple, Trican must be priced at the beginning of 2027 at $ 7.7 per share, indicating an upward potential of 33% compared to current levels. If we adapt for dividends, cumulative returns can be closer to 40% in the coming 18 months.
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