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TFSA Investors: Buy This Stock Now and Thank Me Later!

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Every so often, you learn about a stock that seems “too good to be true.” A stock that’s cheap, despite strong growth metrics. A dividend stock whose yield is not only high, but rapidly growing. A blue-chip stock with small cap returns. These opportunities are rare, but they demand attention, owing to the paradoxical mix of appealing features they share.

In this article I’ll be sharing one such stock. A dividend stock that also offers a ton of growth potential. A (relatively) cheap stock that’s been handily beating the market. A big riser with not too many major risk factors. If you’d bought this stock a decade ago, you’d be up over 1,200% today. Incredibly, it may still be a good buy.

The name of that stock?

Alimentation Couche-Tard

Alimentation Couche-Tard Inc (TSX:ATD.B) is Canada’s biggest convenience store company. It started in Quebec with its chain of Couche-Tard stores, and began growing dramatically after buying Circle K from U.S.-based ConocoPhillips. Buying Circle K gave Alimentation a foothold in the U.S., where it continues to operate. The company also brought the chain to Canada, taking over Irving and Ultramar stores and turning them into Circle K locations.

This strategy of growing by acquisitions has worked out well for Alimentation Couche-Tard. As previously mentioned, its stock is up more than 1,200% in under a decade. Its earnings are also up: in its most recent quarter, the company earned $578 million, up from just $54 million in 2006. This growth has not come at an unreasonable cost, either, as ATD.B has a debt-to-equity ratio of just 0.95.

A huge international presence

One of the biggest assets Alimentation Couche-Tard has is an enormous global presence. The company is first in gas station convenience store sales in the U.S., with 6.1% of the market, and second in overall convenience store sales. It also has a significant presence in Europe, where it made $1.9 billion in fuel sales in the most recent quarter.

A low but rapidly rising dividend

You might recall that I started this article by saying that I was going to reveal a stock that offers both dividends and growth.

As it turns out, that’s exactly what Alimentation Couche-Tard has. Set to pay $0.25 in dividends this year, the stock has a 0.56% forward yield. No, that’s not the highest yield you’ll find, but this stock’s dividend growth has really been something else: over the past decade, the payout has risen by 27% a year! Incredibly, that dividend growth hasn’t resulted in a high payout ratio, as ATD.B pays out just 10% of its earnings as dividends.

So what you’ve got here is a company that has grown through acquisitions, without a ridiculous amount of debt, and a dividend growth stock with an ultra-low payout ratio. This is a rare combination of qualities for a single stock to have, and ATD.B has all of them in spades. Buy it, and you’ll likely find yourself sitting pretty in the future.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends ALIMENTATION COUCHE-TARD INC.

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