1 Dividend Stock to Buy for Growth and Stay for a 5.5% Yield

This dividend stock has been rising higher, but more could certainly be on the way. Now is the time to grab its 5.51% dividend!

| More on:
grow money, wealth build

Image source: Getty Images

Right now is a great time to get in on investments. We still have so many stocks on the TSX today that are below fair value. And yet, there continues to be a climb in share price while still offering a higher dividend yield than average for many stocks.

Such is the case for Paramount Resources (TSX:POU) on the TSX today. Shares are up significantly in the last few months, though it still offers a 5.51% dividend yield as of writing. So, let’s look at what’s been happening with the stock and why it’s a solid buy these days.

What happened?

Mostly, it’s the company’s strong financial performance that keeps investors coming back for more. Paramount stock reported significant increases in revenue and cash flow for the first quarter of 2024. The company achieved a cash flow from operating activities of $1.0 billion, indicating a strong ability to generate cash from its core operations. 

The company invested $214 million in capital expenditures during the first quarter, focusing on strategic projects in the Grande Prairie and Kaybob regions, which involved drilling new wells and bringing existing ones into production. This investment has not only boosted production but also positioned the company for future growth.

What’s more, Paramount Resources maintained a net debt of only $68 million, with a $1.0 billion revolving credit facility that remains undrawn. This strong liquidity position allows the company to finance its operations and growth projects without additional borrowing.

The dividend

So, now that we know why shares have been rising higher, let’s look at the dividend. This also influenced a rise in share price, as Paramount stock recently increased its regular monthly dividend by 20% from $0.125 to $0.15 per share. This new dividend rate began with the payment on May 31, 2024, to shareholders of record on May 15, 2024. This decision underscores the company’s ongoing commitment to delivering shareholder returns through both dividends and organic growth while maintaining a strong balance sheet.

Paramount stock has consistently paid dividends, showing resilience and stability even through fluctuating market conditions. Their approach has been to provide steady and growing dividends supported by robust earnings and cash flow from operations. 

Furthermore, the company’s dividend is relatively new but growing. Since introducing a regular monthly dividend policy in July 2021, there have been five increases! In fact, a special dividend was also declared in December 2022, further emphasizing Paramount’s financial robustness and commitment to returning value to its shareholders.

Bottom line

Overall, Paramount stock looks like a promising investment with a strong future outlook. Wall Street analysts have issued favourable ratings for Paramount Resources, with a consensus of “moderate buy.” The stock has also shown a significant increase of about 25.9% since the beginning of the year. What’s more, today’s share price still offers value based on consensus price targets of $37.80 as of writing.

Paramount Resources exhibits several positive attributes, including strong financial performance, consistent dividend growth, positive market sentiment, effective debt management, and strategic capital investments. These factors collectively indicate a promising future outlook for the stock. So, with growth continuing and a 5.51% dividend yield, it looks like a strong investment 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.

More on Dividend Stocks

Cogs turning against each other
Dividend Stocks

How Interest Rate Cuts Affect REITs

Now is a good time to investigate Canadian REITs and take a position in the form of stocks or exchange…

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Dividend Stocks

3 Affordable Passive-Income Stocks That Pay Monthly

These three monthly-paying dividend stocks could boost your passive income.

Read more »

Dividend Stocks

Retirees: 2 High-Yield Dividend Stocks to Buy in July

Retirees can rely on these dividend stocks for steady passive income and high yields.

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

CPP Benefits Not Enough? This Top Dividend Stock Can Help Fund Your Retirement

Dividend stocks like Fortis Inc (TSX:FTS) have funded many a retirement.

Read more »

A steel grain silo storage tank with solar panel in a yellow canola field in bloom in Alberta, Canada.
Dividend Stocks

The Ultimate TSX Stock to Buy With $1,000 Right Now

Once at triple-digit prices, Nutrien stock (TSX:NTR) now offers a steal of a deal for long-term growth as well as…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Set and Forget: 1 Dividend Stock That Could Create $1,000 in Tax-Free Passive Income in 10 Years

Enbridge operates a low-risk business that has allowed the TSX dividend giant to raise its payout by 10% annually since…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Passive Income: How to Make $106 Per Month Tax Free

Holding quality, high-yield dividend stocks such as Freehold Royalties in a TFSA can help you earn tax-free income for life.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Earn a TFSA Paycheque Every Month and Pay No Taxes on it

Stocks like First National Financial (TSX:FN) pay you monthly. You can also earn monthly dividends through portfolio diversification.

Read more »