Canadian investors can use the benefits offered by the tax-free savings account (TFSA) to transform a registered account into a cash-pumping machine. All declarations generated from qualified investments in a TFSA are exempt from Canada Revenue Agency taxes, making it an ideal account to keep dividend shares.
In this article I have identified such a TSX shares that is positioned to grow his dividends at a steady pace in the coming years. Let’s see why a TFSA investor today has to invest $ 10,000 in this Canadian dividend share.
Is this TSX dividend share a good purchase?
Valued on a market capitalization of $ 1.6 billion, Bird construction (TSX: BDT) is a Canadian construction company that provides services to industrial, construction and infrastructure markets. It builds production facilities, institutional buildings and civilian infrastructure projects and offers electrical services.
Bird serves several sectors, including oil and gas, renewable energy, health care, education and government, and offers a full range of services, from preparing sites to complex industrial construction.
Bird Construction posted mixed results of the second quarter, but made a strategic acquisition that strengthens its infrastructure capacities. De Grossarge rose to 10.6% in Q2, an increase of 8.6% in the period from a year ago, while the adapted EBITDA (profit for interest, taxes, depreciation and amortization) improved the margin from 5.3% to 6.5%.
Turnover fell marginal to $ 850.8 million due to project delays caused by economic uncertainty. Many customers postponed work while waiting for clarity about trade policy and rates, and the delays had the most influence on Bird’s private industrial customers.
Bird Construction finished Q2 with a record backlog of $ 4.6 billion, an increase of 36% year after year. It has concluded almost $ 1.2 billion in new contracts in Q2 and the backlog contains higher margin projects compared to last year’s contracts.
Growth acquisition
The company announced a considerable acquisition of Fraser River Pile & Dedge for $ 82.3 million. FRPD, an 114-year-old entity, brings marine construction, land funeral and dredging options, and offers birds access to specialized equipment. Moreover, FRPD has an exclusive 20-year contract to maintain the navigation channel of the Fraser River.
This deal is in line with Bird’s strategy to acquire companies with specialized skills and strong margins. FRPD generates around $ 160 million in annual turnover and $ 20 million to EBITDA. The acquisition is expected to stimulate the profit per share of Bird by 7% throughout the year.
FRPD opens new growth opportunities for Bird, because the latter can now bid on larger marine infrastructure projects. Canada invests heavily in portupgrades and arctic facilities, and FRPD has experience in these markets from earlier projects in Churchill, Montreal and Hamilton.
Is this TSX shares undervalued?
Bird expects sales growth in the second half of 2025 compared to the same period last year. However, the pace will be slower until the uncertainty of trade has been resolved. In addition, the construction company maintains its objective of 8% EBITDA margins, above the current margin of 6.5%.
Analysts predict the turnover of BIRD Construction to rise from $ 3.4 billion in 2024 to $ 4.4 billion in 2027. During this period the adjusted income will be expanded from $ 2.04 per share to $ 3,53 per share.
An increasing profit -based basis must enable the TSX share to increase its annual dividend of $ 0.59 per share in 2024 to $ 1.12 per share in 2027. This means that the effective return for BDT investors in 2027 could increase to 3,8% in 2024.
If the TSX dividend share is priced at a profit of 15 times, it can return more than 90% in the coming 18 months, making it now a TOP TFSA investment.
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