Beat the TSX With This Unstoppable Dividend Stock

This top dividend stock has significantly outperformed the TSX over the last decade, making it one of the best to buy for the long haul.

| More on:
Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept

Image source: Getty Images

Saving money each month and investing for the long term is essential for all Canadians to work toward their retirement goals and reach financial freedom. And while investing certainly isn’t completely straightforward, it doesn’t have to be difficult either, particularly if you look to buy safe and reliable TSX dividend stocks.

The easiest way to invest, and one that is recommended for investors with little time to spend researching individual stocks, is to simply invest in an index fund that tracks the TSX, for example.

That’s why the performance of stocks is always compared to these benchmark indices. Investing in a stock market index still has risks, but if you invest for the long haul, the market and economy are constantly growing.

However, while there are certainly benefits to investing in an index fund, investors have the potential to earn far more by selecting individual stocks that they think can beat the performance of these indices, such as a TSX dividend stock like Alimentation Couche-Tard (TSX:ATD).

Couche-Tard is a dividend stock that doesn’t return that much cash to investors. It currently has a dividend yield of just 0.84%. However, because it invests the majority of its earnings back into the company for future growth, it’s been one of the best TSX dividend stocks for years.

In fact, it has beaten the TSX in nine of the last 10 years. Furthermore, in total, over the last decade, Couche-Tard has earned investors a return north of 670% compared to the TSX, which has gained just 56%.

So, if you’re looking to find high-quality investments that you can buy and hold for years, here’s why unstoppable TSX dividend stocks like Couche-Tard are some of the best stocks to consider.

How to find the best dividend stocks to buy on the TSX

Many investors believe that to achieve sky-high gains, you need to invest in a high-potential tech stock or some other company with a revolutionary product or service. However, Couche-Tard has proven, with its incredible performance that’s lasted for more than a decade, that even companies with relatively simple businesses can achieve impressive growth with the right strategy.

After all, the Couche-Tard makes its money by owning convenience stores and gas stations in countries around the world. This is a defensive business, and its worldwide diversification helps to reduce risk. But the majority of its growth has come from incredible management and strong execution by the company, which is why it’s grown at a compound annual growth rate of 22.7% over the last decade.

Of course, just because Couche-Tard is one of the best TSX dividend stocks you can buy on the market doesn’t mean it should be one of your only investments. It’s still essential to diversify. Furthermore, not every stock you buy is going to earn a CAGR of more than 22% over a decade.

However, with that being said, there are plenty of stocks that can certainly beat the TSX, especially when you invest for the long term.

Here’s why Couche-Tard is a top stock to buy now

Even after its incredible performance over the last decade and more, Couche-Tard continues to be one of the best dividend stocks to buy in order to outpace the TSX.

While much of its growth has come from making high-quality acquisitions, in recent years, it’s also begun to focus on growing organically, which continues to give it tonnes of growth potential.

Couche-Tard’s decision to bring all convenience stores under one brand name in each country not only helps to improve customer loyalty but also allows the stock to scale its costs and improve its margins.

Furthermore, the fact that Couche-Tard is a relatively defensive stock helps as well, because even with a deteriorating economic environment, the consumer staple stock can expect its sales and profitability to remain robust.

So, if you’re looking for a high-quality dividend stock that you can buy and hold for years to come and have the confidence that it can outpace the TSX, there’s no question that Couche-Tard is one of the top investments that Canadians can make today.

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 Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool has a disclosure policy.

More on Dividend Stocks

potted green plant grows up in arrow shape
Dividend Stocks

Best of Both Worlds: 3 Growth Stocks That Also Pay Dividends

Dividend stocks are great until a downturn ends. But luckily, these three dividend stocks also offer a massive amount of…

Read more »

Payday ringed on a calendar
Dividend Stocks

Monthly Passive Income: 2 Top TSX Dividend Stocks to Buy in June 2023

Here are two of the best TSX monthly dividend stocks you can buy in June 2023.

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in June 2023

Top TSX dividend stocks are now on sale.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Retirees: 2 TSX Dividend Stocks That Reliably Pay You Cash

With strong underlying businesses, high-yielding dividends, and stable cash flows, these two TSX stocks can be excellent investments to consider.

Read more »

sad concerned deep in thought
Dividend Stocks

Better Buy for TFSA Passive Income: Telus Stock or TD Bank? 

Your passive income depends on the dividend yield you lock in. Telus and TD Bank are good investments, but which…

Read more »

Dividend Stocks

Turn a $10,000 Investment Into $844 in Cash Every Year

The power of compound interest from regular investments in quality dividend stocks can deliver solid long-term returns and make you…

Read more »

Dividend Stocks

Grab This 10.8% Dividend Yield Before It’s Gone!

This dividend stock is down 43% in the last year, and it's about to turn around in the near future.…

Read more »

grow dividends
Dividend Stocks

2 TSX Dividend Stocks With Seriously Huge Payouts 

If you are looking for dividend payouts of up to 7-11% of the stock price, now is the time, as…

Read more »