1 Dividend Stock Down 13% to Buy Right Now

Parkland (TSX:PKI) stock may be down by 13%, but shares are still way up in the last year. So, this could be more of a deal and less of a dud.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published April 23, 2024 3:45 pm EDT

When it comes to looking for cheap dividend stocks, I actually don’t look for companies that are down. Instead, I want companies that are up. The key, however, is these dividend stocks must overall be up over the long term, at least in the last year.

From there, is the company providing value? Let’s dig into one that certainly fits this category right now.

Man data analyze — Image source: Getty Images

Parkland

The company investors should consider these days for a deal on a dividend-growth stock is Parkland (TSX: PKI). Parkland stock one of the largest independent fuel retailing companies in North America. Originally founded in 1975, it has grown through acquisitions and strategic expansions to become a leading marketer and distributor of fuels and lubricants.

Parkland now operates a diverse portfolio of businesses, including retail gas stations, convenience stores, commercial fuelling operations, and wholesale fuel distribution. It operates in Canada, the United States, the Caribbean, and the Americas, serving a wide range of customers, including retail consumers, commercial and industrial clients, and wholesale customers.

Parkland focuses on providing fuel, convenience, and mobility solutions while emphasizing sustainability and innovation in its operations. And this has allowed it to maintain a strong dividend, currently at a yield of 3.32%!

Earnings drop

However, earnings fell for Parkland stock in recent months. After achieving all-time highs of $48 per share, the company has fallen back by about 13% as of writing. This comes mainly after poor earnings. Yet, there could still be momentum setting the stock up for success.

Earnings soared past estimates during the company’s third quarter. However, in the fourth quarter, the company fell back once more, missing estimates. And this led to the share drop.

However, first-quarter earnings are now around the corner. The company recently announced it would be releasing results in May. So, what should investors look for?

What to watch

If you’re interested in Parkland stock, there are a few things that investors will want to look into further during this first quarter. First off, the company should see revenue growth as well as earnings growth climb back. This will show the company is expanding its market presence and generating profits.

Furthermore, examine its cash flow. Strong and growing cash flow indicates that Parkland has the financial resources to fund its operations, invest in growth opportunities, and reward shareholders through dividends or share buybacks.

Then there’s same-store sales growth and fuel volume growth. For its retail operations, monitor same-store sales growth. Increasing sales from existing locations demonstrates the company’s ability to attract and retain customers, which is crucial for long-term sustainability. Furthermore, growing fuel volumes indicate increased demand for its products and services, which is a key driver of revenue and profitability.

Bottom line

Parkland stock may have had a weak fourth quarter, but it’s a new fiscal year for the company, and that could mean even more growth is ahead. So, if you’re looking for a dividend stock offering a deal, it’s certainly the company I would consider on the TSX today.