Dividend-growth stocks offer a compelling mix of income and growth, making them an excellent choice for long-term investors. While the S&P/TSX Composite Index has many well-known dividend payers, some high-potential stocks still fly under the radar and often don’t get the recognition they deserve.
Such Canadian dividend stocks that not only pay regular dividends but also consistently increase their payouts have the potential to outperform the TSX in the long run, making them smart picks for beginning investors as well as seasoned market participants. In this article, I’ll highlight two such TSX dividend-growth stocks that have strong fundamentals and attractive growth prospects. Let’s take a closer look at them.
Quebecor stock
Quebecor (TSX:QBR.B) is a Montréal-headquartered company that operates in the media and telecommunications industries mainly through its subsidiaries like Videotron and TVA Group. The company currently has a market cap of $6.7 billion as its stock trades at $28.95 per share after sliding by 8% so far in 2024. At this market price, this TSX stock offers a 4.5% annualized dividend yield and distributes these payouts on a quarterly basis. Interestingly, its dividend per share has gone up by around 37% over the last three years (ended in December 2023).
Last year, Quebecor’s earnings climbed by 12% YoY (year-over-year), while its total revenue inched up by nearly 20%. Despite the ongoing challenging macroeconomic environment and high inflationary pressures, the company is continuing to maintain positive financial growth this year as well. In the first quarter of 2024, its recent acquisition of Freedom Mobile helped Quebecor post a strong 22.2% YoY increase in its revenue to $1.4 billion. Similarly, its adjusted quarterly earnings rose 20.3% from a year ago to $0.71 per share, also beating Street analysts’ expectations of $0.67 per share.
Going forward, Quebecor’s financial growth trends could improve as it continues to focus on debt reduction, disciplined cost management, and strategic investments. In addition, easing inflationary pressure is likely to support its business growth, which should help its share prices recover fast.
Canadian Tire stock
Canadian Tire (TSX:CTC.A) could be another top dividend-growth stock to buy on the Toronto Stock Exchange right now. This Toronto-headquartered retailer is well known for its extensive range of automotive, sports, and home products. It currently has a market cap of $7.8 billion as its stock trades at $135.94 per share after sliding by 5.7% over the last six months. Canadian Tire stock has an attractive 5.1% annualized dividend yield at the current market price and distributes these dividend payments quarterly, just like Quebecor. In the five years ended in December 2023, its dividend per share has surged by a solid 93%.
In the first quarter, Canadian Tire’s sales dived by 4.9% YoY to $3.5 billion as the challenging consumer demand environment continued to affect consumer spending. Nevertheless, the company registered a strong performance in the retail and financial services segments, with product margin expansion and reduced inventory levels.
Moreover, Canadian Tire’s proactive efforts to optimize supply chain efficiencies, minimize unnecessary costs, and leverage digital technologies brighten its long-term growth outlook, making it an attractive dividend-growth stock to buy on the TSX today.
