As investors, we should demand it all. We want growth, we want income, and we want all of it right away. This might sound greedy, but honestly, that’s what investing is about isn’t it? Greed over your own future, and trying to find the best TSX stock that can get you there.
This is why today we’re going to look at a top TSX stock that can provide you with both dividends and growth. The company already has a dividend on hand and has seen shares rise higher and higher. So, let’s look at why mining company Franco-Nevada (TSX:FNV) is a top choice for both dividends and growth for today’s investors.
Financial strength
First let’s get into why the company is so strong, and that comes down to its financials. FNV stock is a leading gold-focused royalty and streaming company with a diversified portfolio of assets in precious metals, oil, gas, and other commodities. This unique business model provides stable cash flows with lower operational risks compared to traditional mining companies.
This was demonstrated recently in its earnings report. For the first quarter (Q1) of 2024, Franco-Nevada reported revenue of $307.4 million, an increase from $300.2 million in the same period last year. The company also saw a rise in net income to $174.9 million, translating to $0.92 per share, compared to $158.1 million or $0.83 per share in Q1 2023.
What’s more, earnings before interest, taxes, depreciation, and amortization (EBITDA) was reported at $249.7 million. This reflects a margin improvement driven by higher gold prices and cost efficiencies. Add in that the company also saw a quarter-over-quarter improvement, and it continues to demonstrate strength.
More growth to come
Over the past year, Franco-Nevada’s stock has grown by around 15%, outperforming many peers in the precious metals sector. Over the past five years, shares have appreciated by approximately 80%, highlighting long-term capital-appreciation potential. The company also exhibits lower volatility compared to mining stocks, given its business model, which provides stable and predictable revenue streams.
Yet FNV stock is well-positioned to benefit from higher commodity prices, particularly gold, which is trending upward due to macroeconomic uncertainties and inflationary pressures. The company continues to expand its portfolio with new royalty and streaming agreements, enhancing future cash flow potential. Franco-Nevada’s diversification into oil, gas, and other minerals provides a hedge against fluctuations in precious metal prices.
This has been seen through the company’s strategic initiatives. FNV stock is focused on portfolio expansion through strategic acquisitions in key mining regions globally. The company is investing in technologies to improve operational efficiencies and asset management. It’s also why analysts provide the company with a strong positive outlook.
Dividends on deck
So, you have growth, a strong company, and then, of course, the dividend. FNV stock has a strong history of dividend payments, supported by its cash-rich royalty and streaming business model. Currently, the dividend yield is 1.16%, which, while modest, is bolstered by consistent dividend growth.
The company has increased its dividend annually for over a decade, reflecting a strong commitment to returning capital to shareholders. Moreover, Franco-Nevada maintains a conservative payout ratio, typically below 50%, ensuring dividends are well-covered by earnings.
Altogether, FNV stock is a strong, strategic investment for those seeking out both dividends and growth.
