A Dividend All-Star I’d Buy Over Shopify Any Day

I’m looking beyond Shopify Inc. (TSX:SHOP) stock today and targeting a top dividend all-star stock instead.

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Shopify (TSX:SHOP) is an Ottawa-based company that provides a commerce platform and services in Canada, the United States, Europe, and around the world. Indeed, coming into the 2020s the company had hoped to take its brand international. The company’s e-commerce platform has been hailed by the merchants who use it, but its predominant English language use meant that the company had to find a way to broaden its coverage. Shopify has been on an exciting run.

However, today I want to zero in on a dividend all-star stock that I’d buy over Shopify any day.

How has Shopify performed in recent weeks?

Shares of Shopify have jumped 5% month over month as of late-morning trading on Friday, July 14. This top tech stock is still up 89% in the year-to-date period. Its shares have soared 129% year over year.

The company released its first-quarter fiscal 2023 earnings back in early May. At the time, Shopify announced layoffs that appeared to give onlookers a jolt of confidence. Moreover, the company posted revenue growth of 25% to $1.5 billion. Gross profit jumped 12% to $717 million. Shopify’s balance sheet leaves something to be desired at the time of this writing, and its growth has slowed down in recent quarters. I still like this e-commerce giant in the near term, but there are potential storm clouds brewing, as it has recently found itself the target of an inquiry by the Canada Revenue Agency into its merchant stable.

Instead of betting on Shopify’s volatility, I’m looking to a dividend all-star that will help me sleep a little better a night.

Why this dividend all-star stock is my pick today

Toromont Industries (TSX:TIH) is a Toronto-based company that provides specialized capital equipment in Canada, the United States, and around the world. Its shares have moved up marginally month over month as of early afternoon trading on July 14. Meanwhile, this dividend all-star stock has increased 10% so far in 2023.

Investors can expect to see Toromont’s next batch of earnings on July 26, 2023. In the first quarter of fiscal 2023, the company delivered revenue growth of 23% to $1.06 billion. Moreover, operating income has increased 48% to $127 million. Toromont delivered net income of $96.0 million, or $1.17 per share — up 61%, or 63% per share, compared to the first quarter of fiscal 2022.

On the revenue front, Toromont Industries delivered growth of 24% in its Equipment Group, and CIMCO rose 17%. Toromont Industries saw bookings decline 33% compared to the same period in fiscal 2022. Moreover, the company’s backlog dipped to $1.2 billion — down from $1.5 billion as of March 31, 2022.

Here’s why Toromont qualifies as a dividend all-star stock

This stock has achieved 33 consecutive years of dividend growth at the time of this writing. That gives Toromont one of the longest dividend-growth streaks on the Canadian market. Toromont currently offers a quarterly dividend of $0.43 per share. That represents a modest 1.6% yield. Meanwhile, shares of Toromont last had a price-to-earnings ratio of 18. That puts Toromont in favourable value territory right now.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.

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