The best dividend stocks allow long-term shareholders to earn outsized returns through consistent passive income and capital gains. Furthermore, fundamentally strong companies with sustainable payout ratios and growing cash flows consistently increase their dividends, increasing returns at cost.
An example of such a TSX dividend share with a monthly payout is Savaria (TSX:SIS). With a market capitalization of $1.5 billion, Savaria pays shareholders an annual dividend of $0.55 per share, which translates into a forward yield of 2.7%.
While the dividend yield may not seem attractive at first glance, the small-cap stock TSX has returned 300% to shareholders over the past decade. Adjusting for dividend reinvestments, cumulative returns are close to 430%.
Is this TSX dividend stock still a good buy?
Savaria designs, manufactures and installs accessibility solutions for the elderly and physically disabled in Canada, the US, Europe and internationally.
The company operates through two segments:
- Accessibility (elevators, stair lifts, platform lifts, wheelchair accessible vehicles)
- Patient care (ceiling lifts, medical beds, therapeutic equipment)
These products serve the residential, commercial and healthcare markets through dealers and direct sales.
In the third quarter (Q3) of 2025, Savaria reported an EBITDA (earnings before interest, taxes, depreciation and amortization) of 21.2%, a quarterly record. The company’s gross margins also reached a record high of 39.2%, compared to 37% last year.
An improvement in profit margins reflects the two-year transformation under the Savaria One program, which focused on operational improvements, purchasing efficiencies and strategic pricing initiatives.
The Accessibility segment reported an EBITDA margin of 23.5%, while healthcare margins were 18.3%. The company reported revenues of $224.8 million, up 5.2% year over year, driven by organic growth and favorable currency effects.
Savaria ended the third quarter with a net debt-to-EBITDA ratio of 1.19 times, compared to 1.63 times in 2024. Free cash flow increased 51.5% year over year, allowing the company to reduce its debt balance by $11.5 million in the third quarter.
Savaria now has approximately $290 million in available resources for future investments and acquisitions, positioning the company for its next phase of growth.
Management implemented more than 60 initiatives this quarter alone that delivered millions in savings, demonstrating the sustainability of the operational improvements.
The company is expanding its research and development team from 50% to 62% of previous levels to accelerate new product development and maintain its position as a preferred choice for dealers.
What is the price target of Savaria shares?
Savaria plans to unveil its five-year strategic plan in April 2026, focusing on growth after two years of margin improvement. The company will rebrand its European operations under the Savaria name from early next year, aligning products with North America and moving towards a true one-stop-shop model.
Management maintained full-year revenue guidance at approximately $925 million, while revising EBITDA margin expectations to just above 20%.
The elimination of advisory fees for strategic initiatives by 2026 will add $0.17 per share to earnings and provide additional momentum as it focuses on the next phase of value creation aimed at accelerating organic and acquisition-driven growth.
Analysts covering the TSX stock predict that adjusted earnings will rise from $1.17 per share in 2025 to $1.72 per share in 2028. During this period, free cash flow is expected to improve from $96.6 million to $133 million.
Given an annual dividend of $0.55 per share, the annual dividend cost for Savaria is approximately $39 million, suggesting a payout ratio of over 40% in 2025, which is sustainable.
If Savaria stock is priced at 16 times forward earnings, which is similar to the current multiple, it should rise 30% from current levels over the next two years. Adjusting for dividends, the cumulative return could be roughly 36%.
#dividend #stock #pays #cash #month