When it comes to investing in dividend stocks, goeasy (TSX:GSY) consistently stands out on the TSX. This Canadian financial powerhouse, specializing in consumer loans and lease-to-own services, has a history of performance that’s hard to ignore. With a remarkable track record and an aggressive growth strategy, GSY shows every sign of outpacing the TSX, quarter after quarter. Let’s dive into the compelling reasons behind its anticipated growth and resilience.
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Into earnings
In recent earnings, goeasy showcased solid growth, achieving a 15.4% year-over-year revenue increase and 17.7% earnings growth. With net income reaching $265 million, GSY’s ability to generate substantial profit despite economic challenges makes it a reliable performer in the dividend stock arena. The impressive quarterly growth highlights how well the company’s model resonates with its target market, boosting investor confidence.
goeasy’s expanding loan portfolio adds fuel to its growth. Its gross consumer loan portfolio grew by approximately $235 million to $265 million in Q3 2024, with loan yields around 33%–34%. This growth in higher-yielding loans supports strong profitability and maintains a high profit margin (33.4%), thus contributing to steady dividend payouts and future stock appreciation.
A forward dividend yield of 2.6% sets goeasy stock apart in the finance sector. Unlike many high-yield stocks, which often face struggles in maintaining dividends, GSY’s payout ratio of just 27.7% suggests that its dividend is not only sustainable but also primed for growth. For investors, this means not only enjoying a steady income stream but also benefiting from future dividend increases as the company scales.
Buying and buying
Goeasy stock’s forward price/earnings (P/E) ratio of 8.8 highlights its value relative to earnings potential. This lower-than-average ratio compared to the broader financial sector offers an attractive entry point for investors seeking dividend income and capital gains. A modest valuation like this provides upside potential as GSY continues to expand, particularly as market conditions favour companies with a solid growth trajectory.
In fact, goeasy stock’s ownership structure is another confidence booster, with 57% of shares held by retail investors and 21% owned by insiders. This shows a deep-rooted trust within the company and aligns the interests of management with shareholders. Insider and retail involvement offers stability, reducing the risk of mass institutional sell-offs and supporting share price stability.
Standing strong
In November 2024, goeasy closed a new round of unsecured notes worth over $550 million. This funding was a strategic move to lower borrowing costs, using a currency swap to bring USD borrowing costs down to 5.98% from a previous 6.38%. With this lower cost of debt, goeasy has greater flexibility to invest in growth initiatives and continue rewarding shareholders with dividends.
Furthermore, goeasy’s resilience is rooted in its focus on non-prime lending through its brands, including easyfinancial and easyhome. By catering to an underserved market with installment loans and point-of-sale financing, goeasy meets a critical demand, thus making it less susceptible to economic downturns. Its diverse loan products across Canada’s markets mean continued revenue, even during economic shifts.
Despite holding $3.3 billion in debt, goeasy has a solid debt management strategy with a current ratio of 16, demonstrating it can comfortably handle short-term obligations. This financial health translates to more consistent returns for shareholders and the continued capacity to fund dividends, all while exploring new growth opportunities.
Bottom line
Looking ahead, goeasy’s ambitions are supported by its $1.8 billion funding capacity, which it plans to use for organic growth. The company’s omni-channel approach and vast network of over 10,300 merchant partners across Canada give it access to new revenue streams and clientele, positioning GSY for continued expansion.
For dividend investors, goeasy stock is a shining example of a growth-driven stock with staying power. From its strong earnings to its efficient debt management and investor-focused business strategy, goeasy stock is well-positioned to outpace the TSX. Whether through dividend income or capital appreciation, GSY delivers value and offers a promising future outlook. As GSY continues on its upward trajectory, it looks ready to reward investors again and again.
