1 Dividend Stock Down 22% to Buy Right Now

FTT stock (TSX:FTT) recently saw a drop that could be a great opportunity for investors looking for growth over the next year and beyond.

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Investors are starting to consider stocks that could recover more and more. There’s been a major shift away from investing in dividend stocks, and instead to looking at what could grow. Yet there are also companies that offer both!

That’s why today we’re going to look at Finning International (TSX:FTT). FTT has fallen by 22% since highs reached a few years back. However, it’s now on the rise, offering substantial returns for investors today.

What is it?

Before we even get into why you should invest in the stock, it’s important to look at what it is in the first place. Understanding a company and what it’s about is a great way to see whether it has a long-term outlook, or if this is just a fluke.

For FTT, the company is a distributor and dealer of heavy machinery and parts. They sell and rent equipment to various industries, including everything from mining to construction and forestry and infrastructure.

The construction equipment rental market has been a strong one since the downturn during the pandemic. It’s now projected for long-term growth at a compound annual growth rate (CAGR) of around 6.1%. This alone bodes well for the future of FTT stock.

Recent earnings

Yet when it comes to FTT, growth could be even better. Revenue surged by 13.5% in 2023 compared to 2022 levels, with earnings increasing by 4%. Yet despite the good news, shares of the stock have underperformed the market as well as the industry over the past year.

This could mean that investors could be in on a great opportunity for easy growth. Analysts now predict shares to climb as much as 30% to reach its consensus price target.

Meanwhile, you could also be getting in on a dividend of 2.84%. That dividend is lower than its five-year average of 3.09%, so there could be an increase in the future. What’s more, the payout ratio is super safe at 27.85%. Given that it is usually between 30% and 80%, again that bodes well for a hike.

Value

Then there is the value to consider. FTT stock currently trades at just 10 times earnings, again making it more valuable and lower in share price compared to its peers. Currently, shares are up just 2% in the last year. This comes as earnings brought in lower share growth.

Part of this could be the ongoing volatility of the industry. FTT stock could have a rough year, and management could be trying to keep itself safe rather than make any risky outlooks.

With that in mind, now could certainly be a strong time to consider the stock. You’ll still get a solid dividend, without the risk of a drop. What’s more, you could see shares rebound back to 52-week highs! All-in-all, the company may be down, but don’t count it out yet. Not while we continue to see interest in the market once more on the TSX 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 Amy Legate-Wolfe 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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