goeasy (TSX:GSY) is a rare kind of stock on the TSX for avid investors. It has paid decent dividend income while providing exceptional growth. In the last 10 years, goeasy stock’s total return has been on par with that of Constellation Software, one of the best-performing stocks on the TSX. This also makes goeasy stock one of the best to own.
Here’s how an initial $10,000 investment has grown in the growth stocks in the last 10 years. Dividend income of about $30,000 was a part of goeasy stock’s returns in this period!
CSU and GSY Total Return Level data by YCharts
Moreover, goeasy has beaten Constellation Software’s returns in the last three- and five-year periods. The former stock comes with higher volatility. History indicates that it could be the perfect time to add shares after goeasy stock has substantially corrected. Feel free to choose different periods in the chart below to get a sense of goeasy stock’s volatility.
goeasy stock could help make you a millionaire: Here’s how!
In the last two recessions, namely the 2020 global coronavirus pandemic and 2007-08 global financial crisis, goeasy stock experienced substantial declines. Around those times, there was capital tightening. And it was the best time to accumulate shares in the high-growth stock after a massive selloff.
An initial investment of $10,000 in goeasy stock 14 years ago in 2008 has grown to approximately $128,750. That’s a total return of 20% per year. Another way for investors to look at the wealth-creation potential is using the Rule of 72, which approximates that it’d take investors 3.6 years to double their money on a annualized return of 20%. That is a lightning-fast doubling rate!
If you bought goeasy stock at the pandemic market crash bottom in March 2020, you could have pocketed total returns of 68% per year. This investment doubled investors’ money in about a year and almost quadrupled investors’ money in two years and seven months.
The point is not to stress how long it’d take to double your money but to back up the truck on goeasy stock during meaningful corrections, particularly during recessions. An RBC report forecasts that a recession will hit Canada as soon as the first quarter of 2023.
The goeasy business
goeasy is the largest non-prime lender in Canada. More than 30 years ago, it originally began with lease-to-own financing offerings for home entertainment products, computers, appliances, and household furniture. In 2006, it started offering personal loans and home equity loans as well. Last year, it acquired LendCare, which was established in 2004 and provides point-of-sale financing across more than 4,000 merchant partners.
The Foolish investor takeaway
At $106.81 per share at writing, goeasy stock is discounted by about 20% from its long-term normal price-to-earnings ratio. Analysts believe the business can grow its earnings per share by 25% per year over the next couple of years. Furthermore, it provides a nice initial yield of 3.4% today. It’s also a Canadian Dividend Aristocrat with a 17-year dividend-growth rate of 17.3%.
Let’s say we target a conservative total return of 20% per year going forward. An investment of $10,000 would take about 25 years and three months to transform into $1,000,000. If you are able to save and invest an additional $1,000 each month for the same returns, you’d arrive at $1,000,000 in fewer than 15 years.
The bottom line is that under the Foolish investing philosophy, goeasy is a great addition to a diversified investment portfolio. Particularly, investors should consider building a position during market downturns for accelerated long-term growth.