Many investors often believe there’s a trade-off between growth and income, but some TSX stocks offer both, giving long-term investors the best of both worlds. With interest rates on the decline and economic conditions expected to improve, the opportunities to lock in strong dividend payers with growth potential are becoming increasingly attractive. Whether you’re building wealth or simply looking to boost your passive income, these Canadian stocks are worth considering.
In this article, I’ll highlight two TSX champions that are currently delivering attractive 4.5% yields alongside significant growth potential.
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Exchange Income stock
Exchange Income (TSX: EIF) is the first growth-oriented business that also rewards its investors with attractive dividends. This Winnipeg-based firm mainly focuses on aviation and aerospace as well as niche manufacturing.
EIF stock outperformed the broader market in 2024 by surging over 30%. It currently trades at $58.42 per share with a market cap of $2.8 billion. While the stock offers a 4.5% annualized dividend yield, it distributes these payouts every month.
EIF stock’s strong performance over the last year reflects the strengths of the company’s business model, which continues to help the company post strong results even amid a challenging economic environment. In the third quarter of 2024, Exchange Income’s total revenue rose 3% YoY (year over year) to a record $709.9 million with the help of new contracts in its aerospace and aviation segment and the strength of its manufacturing operations. More importantly, the company’s adjusted quarterly earnings climbed by 8.3% from a year ago to $1.18 per share.
Interestingly, Exchange Income has increased its focus on expanding its footprint through strategic acquisitions and contract wins in recent years. For example, it recently acquired Spartan Mat and Spartan Composites to strengthen its environmental access solutions business. In addition, the company’s aviation expertise recently helped it secure a high-profile contract to provide airborne intelligence, surveillance, and reconnaissance services for a European security agency. Given these strong fundamentals, EIF stock could continue to surge in the years to come.
Canadian Tire stock
Another top TSX stock offering both growth and a solid dividend yield is Canadian Tire (TSX: CTC.A). Mainly known for its iconic retail presence across Canada, this Toronto-headquartered company has a diversified business with operations spanning retail, financial services, and real estate.
After rallying by about 17% over the last nine months, Canadian Tire stock currently trades at $156.37 per share with a market cap of $8.9 billion. It distributes its dividend payouts every quarter and offers a 4.5% annualized dividend yield at the current market price.
In the most recent report quarter ended in September 2024, the diversified Canadian retailer showed strong retail profitability and improved customer engagement despite an environment of constrained consumer spending. Canadian Tire saw growth in its SportChek banner, with a 2.9% YoY rise in comparable sales with the help of targeted promotional efforts and increased demand for athletic footwear and hockey products.
The company recently announced a 15th consecutive increase in its annual dividend, raising it to $7.10 per share. Besides its attractive dividends, Canadian Tire’s strong financial position and focus on operational improvements make it an appealing choice for long-term investors.
