With that in mind, today I’ve identified the most reliable names for dividend growth by screening for Canadian stocks that delivered the highest one-, three-, five- and 10-year dividend growth rates.
The goal was simple: be objective. Let the math do the talking.
Guardian Capital Group And Imperial oil initially looked promising, each occurring in three of the four dividend growth time frames. But both came with meaningful caveats.
Guardian Capital is being acquired by Desjardins Global Asset Management, introducing too much uncertainty for long-term dividend growth investors.
Meanwhile, Imperial Oil is up about 57% so far this year, putting the stock more than 20% above analysts’ consensus price target. Neither situation is ideal for investors looking for reliable value today.
This process left two names that stood out: Food Couche-Tard (TSX:ATD) and easy (TSX:GSY) – the only stock that appears on all four dividend growth lists and still trades at valuations that offer potential upside. These two companies not only have excellent histories of dividend growth, but also have catalysts that support continued upside.
Food Couche-Tard
Alimentation Couche-Tard may not generate as much headlines as technology and energy stocks, but few Canadian companies achieve the same level of consistency and growth.
At around $76 per share, the stock trades at a price-to-earnings (P/E) ratio of around 18.5 – reasonable for a global player with a long runway. Analysts see an increase of about 12% in the short term, but the real story lies much deeper.
Couche-Tard’s dividend growth over 15 years is an astonishing 25.7%. The company just increased its dividend by more than 10% in late November, continuing a tradition of shareholder-friendly capital allocation.
This growth is the result of decades of disciplined mergers and acquisitions, which have expanded the supermarket empire to approximately 17,270 locations in 29 countries.
What could drive more growth in the future is the company’s shift toward more organic growth. Analysts expect earnings per share (EPS) to increase by at least 10% annually in the coming years.
While the stock’s current dividend yield is modest at 1.1%, the ability to increase that payout by double digits makes it one of the most compelling names in dividend growth in Canada. Couche-Tard is a reasonable buy for long-term compounding – and an even better buy because of market weakness.
easy
goeasy tells a different story: a story of volatility, sharp declines and exceptional long-term returns for investors willing to tolerate the risk and turbulence.
As a non-prime consumer lender, goeasy faces unique risks related to financing costs and consumers’ financial health. This year that pressure has increased.
A short-seller report and disappointing third-quarter results caused diluted earnings per share to fall 21% to $9.47, leading to a nearly 46% drop from peak to trough in the stock.
But if history is any guide, these steep pullbacks have consistently created excellent buying opportunities.
Over the past decade, goeasy has delivered diluted earnings per share of 27.6%, yet the stock still trades at a normal price-to-earnings ratio of roughly 11.8 over the longer term due to the risks in the business. Still, this is a low price-earnings ratio for a company with this growth profile.
Dividend growth is particularly impressive: an average increase of 30% over ten years, the highest among Canadian dividend growth stocks.
Goeasy is trading around $136 per share and yields 4.3%, and appears undervalued at around 32%. Volatility may persist in the coming quarters, but for investors comfortable with higher risk – and equipped with a long time horizon – the shares are an attractive buy now, with the potential for even better entry points if weakness persists.
Takeaway for investors
Canada offers some strong dividend growth performers, but Alimentation Couche-Tard and Goeasy stand out as today’s best buys. Both companies are consistently among the top one-, three-, five-, and 10-year dividend growers while still trading at good valuations.
Couche-Tard delivers steady, global growth with decades of proven execution, while goeasy offers higher risk and higher reward through powerful long-term earnings and dividend expansion potential. Together they represent two attractive opportunities for investors seeking long-term income growth and capital appreciation in the Canadian market.
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