Why Dominion Lending Could Be the Best Stock to Buy in December

A high-flying, small-cap stock in the financial services sector is a screaming buy for growth investors in December.

| More on:
data analyze research

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

TSX’s financial sector, where bank stocks belong, gained 25.07% in six months, including five interest rate cuts beginning in June 2024. Except for Toronto Dominion Bank, the big bank stocks are in positive territory after three quarters in fiscal 2024. The rate-cutting cycle is a tailwind not only for the sector but the broad market as well.  

However, a small-cap financial stock is a screaming buy in December. Dominion Lending Centres Group (TSX:DLCG) outperforms the sector (+26.68%) and the TSX (+20.59%). Moreover, at only $7.98 per share, the year-to-date gain is +193.4%. Anyone who invested $9,996 (3,675 shares) at year-end 2023 is $19,330.50 richer today.

Created with Highcharts 11.4.3Dominion Lending Centres PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Returning buyers

Dominion Lending is a $383.8 million national mortgage brokerage and leasing company providing mortgage products under its first-time homebuyer programs and extending financing solutions to self-employed individuals, including those with limited access to credit or unsatisfactory credit records.

The housing market shows that buyers are back, evidenced by increasing home sales. The pent-up demand is gradually converting into transactions as rates fall. Industry experts expect the market to gain steam following the 7% year-over-year increase in October home sales. Lower short-term interest rates and rising inventories of unsold homes should likewise spur real estate market activity.    

Strong momentum

“The DLC Group maintained its strong momentum from the first half of the year, achieving an 11% increase in funded volumes and a 13% increase in revenues for Q3 2024 compared to Q3 2023,” said its executive chairman and chief executive officer (CEO), Gary Mauris.

In the nine months ended September 30, 2024, net income soared 480% year over year to $11.98 million. Because of higher revenues, income from operations and free cash flow climbed 46% and 94% to $21 million and $10.5 million from a year ago. Around 8,784 brokers and 521 franchises helped facilitate the mortgage transactions.

Allied business

DLCG’s three principal subsidiaries, MCC Mortgage Centre Canada, MA Mortgage Architects, and Newton Connectivity Systems, are why the business thrives nationally. An allied business is commercial equipment financing through the Easy Lease program.

Customers or any business operating or generating revenues from almost any equipment over two years can apply to DLCG’s leasing program. The equipment can be machine tools, construction equipment, computers, copiers, office furniture, software, and manufacturing, medical or dental equipment. There are vendor programs for structured financing.

Through Newton Connectivity Systems, DLCG also deals with information security, availability, and confidentiality. Velocity, its proprietary connectivity platform, achieved Service Organization Control 2 Type 2 certification. According to Mauris, Velocity ensures data management in a controlled and secure environment.

Mauris added, “As information, technology and security are fundamental to DLCG’s business, it is important to have an integrated and cohesive technology department managed by a trusted professional.” On November 21, 2024, the company announced the promotion of Steve Mitchell, vice-president of IT and Applications, to chief information officer.  

Strong growth prospects

DLCG is hard to ignore, especially if you’re a growth investor. The small-cap financial stock boasts businesses with strong growth prospects. It pays a modest 1.5%, but the payouts could grow over time along with earnings.

Should you invest $1,000 in BCE right now?

Before you buy stock in BCE, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and BCE wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Christopher Liew 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.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Canadian Red maple leaves seamless wallpaper pattern
Dividend Stocks

5 Canadian Dividend Stocks to Buy and Hold for the Next 20 Years

These Canadian stocks have paid dividends for decades, making them reliable investments to generate regular passive income.

Read more »

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »