A Cheap Dividend Growth Stock to Start Your TFSA Retirement Fund in 2020

Why it’s time to buy Alimentation Couche-Tard (TSX:ATD.B) before the Street recognizes how solid of a bet the staple stock is.

2020 is shaping up to be another ridiculously volatile year with the looming U.S. election. But for Foolish investors, another surge in volatility is just an opportunity to discover mispriced stocks in depths of the TSX index.

As more attention is focused on less meaningful big picture events, I’d look to individual companies making significant strides that may not be fully appreciated by the market. Consider Alimentation Couche-Tard (TSX:ATD.B), a convenience store kingpin with the urge to merge.

The company has been doing a lot of things right at the company-specific level, but such progress has largely been ignored as investors seem to be grouping stocks together with little consideration for how individual companies themselves have been faring recently.

As Couche-Tard continues bolstering its same-store sales growth (SSSG) numbers while expanding its international footprint, high double-digit earnings growth numbers are to be expected as management looks to meet its goal of doubling profitability over the next five years.

In short, Couche-Tard has been firing on all cylinders, and I don’t believe an economic downturn will be able to stop CEO Brian Hannasch and company from achieving its ambitious goals. Management continues to demonstrate that it’s capable of delivering massive returns on invested capital and via very creative ways for a company that’s typically been known as old-fashioned, low-tech, or boring.

Getting creative with comps-driving efforts

SSSG is a top performance metric to gauge how retailers are doing. And Couche-Tard has recently been impressing thanks to new food offerings in select stores and better catering to local tastes.

Couche-Tard hasn’t just been giving customers what they want, however. They’re reaching through to customers in an interactive way through engaging promos such as Circle K’s “Rock Paper Prizes” contest, which has since been rebooted to include NHL stars from various Canadian teams.

Hockey-crazy customers can now play rock, paper, scissors against the likeliness of Bo Horvat or Brad Marchand, and win daily prizes like hotdogs, chips, Frosters, buy-one-get-one (BOGO) deals, and various other high-margin items, along with a chance to win a trip to the NHL all-star game.

The goal of the promo is to get customers in stores to redeem their free items and entice them with other products while they’re in the store. Getting customers through the door is half the battle, and the contest is one of the most engaging and creative SSSG-driving initiatives I’ve seen, not to mention the contest itself is quite addicting and amusing!

A perfect stock to buy as we head into recession

As one of the few consumer staples on the TSX, Couche-Tard is a recession-resilient stock that can zig while the markets zag. The stock is inversely correlated to the broader markets with a negative beta of -0.23. Moreover, the dividend (currently yielding just 0.6%) can grow by double-digits, even amid tough economic times.

Fellow Fool Kay Ng praised Couche-Tard as a dividend stock to protect a portfolio from a recession, also highlighting the fact that the company had averaged 22% in dividend growth each year over the last 12 years.

Now that shares have corrected, I’d look to initiate a sizeable position before Couche-Tard has the opportunity to pull the curtain on results that could exceed expectations by a country mile.

Stay hungry. Stay Foolish.

Fool contributor Joey Frenette owns shares of ALIMENTATION COUCHE-TARD INC. Alimentation Couche-Tard is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

shopper pushes cart through grocery store
Dividend Stocks

Staples-First Strategy: Steady Your Portfolio in 2026 With 2 Consumer-Defensive Stocks

Two consumer-defensive stocks are reliable safety nets if the TSX is unable to sustain its strong momentum in 2026.

Read more »

ETF is short for exchange traded fund, a popular investment choice for Canadians
Dividend Stocks

A Magnificent ETF I’d Buy for Relative Safety

Here's why I'd buy BMO Low Volatility Canadian Equity ETF (TSX:ZLB).

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

Protect Your Tax-Free Earnings: 2 TFSA Stocks to Buy Beyond the Boom

Two dividend-growth stocks are TFSA-worthy because they can help grow and safeguard tax-free earnings.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

The 1 Single Stock That I’d Hold Forever in a TFSA

A buy-and-hold TFSA winner needs durable demand and dependable cash flow, and AtkinsRéalis may fit that “steady compounder” mould.

Read more »

dividend growth for passive income
Dividend Stocks

These 2 Stocks Are the Top Opportunities on the TSX Today

With the market having gone pretty much up over the past few years, it's critical for investors to be cautious…

Read more »

dividend growth for passive income
Dividend Stocks

Forget GICs! These Dividend Stocks Are a Far Better Buy

CT REIT (TSX:CRT.UN) and another dividend that might be worth considering if you're fed up with low rates on GICs.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Don’t Bet Against Canada’s Top Dividend Icons Going Into the New Year

Brookfield Renewable Partners (TSX:BEP.UN) and another renewable dividend icon that might be worth picking up.

Read more »

voice-recognition-talking-to-a-smartphone
Dividend Stocks

Sure, Telus Paused Its Payout: It’s My Newest Top Stock Pick

Telus (TSX:T) stock might be closer to a bottom than the top. Here are reasons why it's worth checking out…

Read more »