Dividend Stock goeasy is Down 9%: Time to Buy?

Goeasy stock (TSX:GSY) declined by 9% in the last month, providing the potential for some value after climbing 52% in the last year.

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Few dividend stocks out there offer an opportunity for massive growth, while still providing stable dividends. And yet when it comes to these companies, goeasy (TSX:GSY) stock springs to mind. Shares of goeasy stock are up 52% in the last year after all!

However, shares are still down compared to 52-week highs of $180 per share. In that respect, goeasy stock is down about 9%. That could mean there is an opportunity for growth seekers, and a higher dividend. So let’s look at whether this is a deal waiting for investors to eat it up.

Why it’s worth it

If you’re considering goeasy stock, then we can certainly dig into why this would be a great opportunity for investors. First and foremost is the company’s strong financial performance. Goeasy has a history of strong loan originations and revenue growth. This has resulted in strong profits, as well as positive cash flow.

The company also holds significant market share in the non-prime lender market, making it a stable long-term investment as well. What’s more, economic conditions have actually been favourable for the stock. Goeasy tends to offer lower rates than prime lenders, making it attractive to those seeking loans for a low price.

What’s more, investors with a higher risk tolerance could be attracted to greasy stock for the potential of these high returns. While this may include some volatility in the next year, overall goeasy stock should continue to grow. All while providing a strong dividend yield at 2.84% as of writing.

Notes to consider

Now goeasy stock is definitely a strong choice for long-term income. However, there are hurdles that should also be considered by investors. For instance, goeasy stock is subject to credit risk, with economic downturns or changes in consumer behaviour potentially leading to higher defaults on loans. This could impact company performance, though it hasn’t quite yet.

Furthermore, goeasy is subject to various regulations and compliance requirements. This includes the recent change to the annual percentage rate (APR) to 35%. Goeasy stated that this should get rid of some of its competition, and welcomed the change, but time will tell if it affects the company’s bottom line.

Furthermore, there’s really only so much room for the company to grow within Canada. While the lender has expanded from home and appliance loans to financial loans, it still has banks and credit unions as competition. So to keep up its huge growth, it may need to look internationally. And that comes with its own risks and hurdles.

Is goeasy stock peaking?

Overall, it doesn’t look as if goeasy stock has peaked. In fact, the next three years should see another round of solid growth when the market downturn comes to an end. For certain, after that time the company will need to identify further growth opportunities. For now though, it remains a strong stock that offers some value while down 9%, with a dividend that remains strong and supported by the stock.

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

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