It just keeps getting better for dividend stock TFI International (TSX: TFII). The trucking and logistics company has seen shares climb higher and higher over the last few months, most recently from a US$1.1 billion acquisition of Daseke.
However, it’s not the acquisitions that investors should pay attention to. Instead, it’s the company’s secret weapon that could generate even more cash in the future.
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The big buy
Before we get to the company’s secret weapon, let’s look at the recent purchase and how it will eventually support that weapon. The company purchased Daseke, an operator of flatbed and specialized trailers, in a US$1.1 billion deal.
The goal is to scale up its truckload business, rather than pay to fix up its now aging fleet of vehicles. The purchase provided a 69% premium on Daseke’s closing price but is expected to generate US$3.6 billion in annual revenue.
The purchase would also make TFI stock one of the largest truckload businesses in the country. And while that’s great, there’s even more that investors can look forward to.
The secret weapon
There have been rumours spreading that TFI stock may be listed as two separate companies in the near future. The spinoff would involve having one company focused on the truckload business, with the other on the logistics segment.
The Daseke purchase helps create an even larger trucking business, with the ability to focus on its already strong financial success for its logistics arm. It also comes on top of over 20 acquisitions TFI stock has made since 2009. Even so, this will help the company deliver long-term value. While not likely until 2025 or 2026, it’s still a reason to consider picking up TFI stock today.
We would need to receive a report from TFI stock before heading down the road of real numbers valuing a spinoff. However, it certainly would be a multi-billion-dollar venture that could create incredible value for investors.
Why buy now?
While TFI stock may not see a spinoff for the next two years, the company is already talking about it. So, even in the next year, we could receive more details that bring the company’s share price up even higher. Meanwhile, it has a long history of making valuable acquisitions to bring shares up high as well.
The bottom line here is that this is a dividend stock with immense value and a growing base. The company has strong bottom and top-line growth, cutting costs, creating synergies, and making strong growth opportunities to boot.
Yet right now, you can pick it up with a reasonable 1.13% dividend yield. Furthermore, it offers share growth of 14.25% in the last year alone. That’s after climbing back last summer when times were tough. Right now, even amidst lower demand for consumer products, times are good! And it’s only going to get better for this top dividend stock. Keep an eye on that secret weapon because it’s about to become headline news in the next year or so.
