The Canadian stock market rollercoaster is extending in the second half of 2023 as the latest Fed meeting minutes and strong economic indicators reignited investors’ concerns about more interest rate hikes, which could potentially lead to a recession. These are some of the main reasons why the TSX Composite benchmark has lost 1.7% of its value in July so far after trading on a mixed note in the second quarter.
In such an unpredictable economic scenario, you should ideally hold some evergreen stocks in your portfolio that have a long track record of consistently delivering positive returns to their shareholders.
In this article, I’ll talk about one such trustworthy Canadian stock, Alimentation Couche-Tard (TSX:ATD), and explain why it’s a great stock to consider buying now and holding forever.
Image source: Getty Images
Alimentation Couche-Tard stock
If you don’t know it already, Alimentation Couche-Tard is a Laval-headquartered company with a market cap of $65.2 billion. It runs a large chain of over 14,400 stores across 24 countries and territories, selling convenience products and road transportation fuel. Its stock currently trades at $66.20 per share with about 11.3% year-to-date gains.
In addition, ATD stock offers a 0.8% annualized dividend yield at the current market price and distributes its dividend payouts every quarter. While this dividend yield might not look attractive at first, the fact that its yearly dividend per share has inched up by 116% in the last five fiscal years makes its dividend-growth track record look really impressive.
What makes Couche-Tard a great stock to hold forever
Unless you’re day trading or investing in a stock for the short term, you must look at a company’s long-term financial growth trends before investing in it. That said, Couche-Tard’s long-term financial growth performance stands out from most of its peers.
To give you an idea, the company’s revenue rose 40% in five years from US$51.4 billion in its fiscal 2018 to US$71.9 billion in its fiscal year 2023 (ended in April). More importantly, its adjusted earnings jumped 140% from US$1.30 per share to US$3.12 per share during these five years. Similarly, ATD’s adjusted net profit margin expanded significantly from 2.9% to 4.4% during these years.
These long-term growth trends clearly reflect Couche-Tard’s consistently improving profitability, despite facing several challenges in between, including COVID-19-driven operational issues, inflationary pressures, and global supply chain disruptions.
Besides that, Couche-Tard’s future business growth outlook remains solid, as it continues to focus on driving organic growth and has strong cash flow to support further growth initiatives.
Bottom line
It’s important to note that ATD stock is not only outperforming the broader market this year but has also been delivering positive returns to its shareholders each year since 2009. Since the end of 2008, its stock has delivered an eye-popping positive return of 2,719%, even after excluding its dividends. Given all these positive factors, you can consider any dip in Couche-Tard’s share prices an opportunity to buy this amazingly reliable Canadian stock at a bargain to hold for decades, as it has the ability to outperform the broader market by a wide margin, even during tough economic times.
