Investing $10,000 in a dividend stock with strong returns is one of the smartest ways to create significant passive income over time. Dividend stocks provide steady cash flow, often on a quarterly basis — all while also offering the potential for share price appreciation. Among the many dividend stocks available, goeasy (TSX:GSY) stands out as an excellent example of a dividend stock with a proven track record of strong returns, consistent dividend growth, and a promising outlook.
Numbers don’t lie
As of writing, goeasy’s stock is trading at around $169.84 per share, with an annual dividend of $4.68 per share. This equates to a dividend yield of approximately 2.75%. A $10,000 investment would purchase about 58.9 shares, yielding $275 annually in dividends.
goeasy has built an impressive reputation for rewarding its shareholders. Over the past five years, the dividend stock maintained an average dividend per share growth rate of 21.06%. Far outpacing inflation and many other dividend stocks. This level of growth demonstrates the company’s profitability and its ability to consistently return value to investors. For those reinvesting dividends, the compounding effect amplifies returns, as each payment buys additional shares that generate even more dividends.
The company’s recent earnings highlight its strength and resilience. In its third-quarter 2024 financial report, goeasy announced record-breaking results, with revenue increasing 28% year over year to $340 million. Operating income also grew significantly, up 31% to reach $165 million. These results showcase the dividend stock’s ability to thrive even in a challenging economic environment. Importantly, goeasy’s growing loan portfolio, which expanded by 30% to $3.65 billion by the end of 2023, underscores its solid foundation for future growth.
Growth incoming
Beyond the headline figures, goeasy’s management has been proactive in strengthening its credit and underwriting processes. A low payout ratio of around 27% gives goeasy ample room to grow its dividends further without stretching its financial resources, a reassuring sign for long-term investors.
Looking at the bigger picture, goeasy is positioned in a growing market. As a non-prime lender, it serves customers who may not qualify for traditional bank loans. This niche market has proven to be a lucrative space. goeasy’s strategic expansion efforts suggest it plans to capture an even larger share of this market in the coming years.
One of the key benefits of investing in dividend stocks like goeasy is the potential for capital appreciation. While the dividend stock currently offers a dividend yield of 2.75%, the company’s robust growth trajectory suggests that its share price could rise over time, offering investors the chance to realize gains in addition to their dividend income.
For long-term investors, the compounding effect of reinvested dividends can lead to significant wealth accumulation. By reinvesting the $275 annual dividend into more shares of goeasy, an investor benefits from the power of compounding, as each additional share generates even more dividends in the future. Over the years, this snowball effect can transform a $10,000 initial investment into a substantial source of passive income.
Bottom line
So, how much could this dividend stock make? Here’s what could happen if that $10,000 rose to 52-week highs.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
| GSY – now | $170 | 59 | $4.68 | $276.12 | quarterly | $10,000 |
| GSY – highs | $206 | 59 | $4.68 | $276.12 | quarterly | $12,154 |
That $10,000 could turn into $2,154 in returns and $276.12 in dividends. That’s total passive income of $2,430.12! So, for anyone seeking a reliable way to build wealth and create a steady income stream, goeasy offers a compelling case. As always, investors should consider their financial goals and risk tolerance before making investment decisions.
