Is goeasy Still a Good Buy for Both Dividends and Growth?

With a stellar track record of capital gains and paying shareholders their dividends, let’s look at whether this TSX stock is still a good buy.

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When investing in growth stocks, one of the biggest winners has been goeasy (TSX:GSY) in recent years. While many other growth stocks on the TSX have more recent features, goeasy stock has been trading on the stock exchange since 1990. Initially, it was nothing more than a small home appliance lending company. Now, it has become one of the fastest-growing TSX stocks.

As of this writing, it trades for $166.49 per share, up by 268.75% in the last five years. The stock also pays its investors shareholder dividends at a 2.81% dividend yield. Is goeasy stock a good buy for capturing growth and earning dividends? Let’s take a closer look at the company.

An excellent business

From its humble beginnings as a home appliance lending company, goeasy stock has become one of the country’s largest non-prime lending and lease-to-own companies. While it still offers lending for home appliances, it has diversified into several other areas through its easyfinancial, easyhome, and LendCare brands.

The Mississauga-headquartered $2.77 billion market capitalization stock has seen significant growth in recent years due to a solid financial performance. Since 2012, it has achieved a compound annual growth rate (CAGR) of an astounding 17.7% in revenue, 28.9% in net income and 24.8% in diluted earnings per share.

Additionally, the company continues to expand its market share through a combination of organic growth and acquisitions. goeasy has become the go-to resource for Canadians who cannot secure loans for various needs through traditional lenders, giving the stock a great defensive appeal.

Record earnings

In its recent fourth-quarter earnings results, it reported a 24% growth in revenue year over year. Its loan originations increased by 12%, net income by 161%, and its earnings per share jumped by 154% compared to the same period last year. The growth across all its business segments and improved credit performance also provided a significant boost to goeasy stock.

Besides hitting record numbers, goeasy stock looks set to continue growing shareholder value. The company projects continued growth in its loan portfolio and profitability in the next three years.

Combined with a focus on expanding its distribution channels, the adoption of a risk-based pricing strategy, and increasing its product offerings, there could be much more capital gains in the coming years.

Foolish takeaway

Amid the growth initiatives it is taking on, goeasy stock expects its loan portfolio to reach between $5.80 billion and $6.20 billion by the end of 2026. The midpoint of the guidance reflects a growth of 65% from its current levels.

With growth prospects healthy, it seems like a solid stock to own for capturing wealth growth through capital gains for several years. In addition to its growth potential, goeasy stock is also becoming a great dividend stock to own.

With 10 consecutive years of dividend hikes under its belt, it might be a good stock to own for growth and dividends. While macroeconomic factors can still impact its ability to deliver growth in the short term, it might be a solid long-term holding to consider for your self-directed portfolio.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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