As the Tax-Free Savings Account (TFSA) contribution limit holds steady at $7,000 for 2025, Canadian investors are on the lookout for robust opportunities to maximize their tax-free gains. One compelling contender is Exchange Income (TSX:EIF): a diversified acquisition-oriented company with a strong track record in aerospace, aviation services, and manufacturing. So, let’s get into why this dividend stock belongs on your TFSA radar.
The numbers
Exchange Income has consistently demonstrated financial resilience and growth. In 2023, the dividend stock reported revenues of $2.63 billion, reflecting a significant increase from previous years. Net income stood at $122.09 million, translating to earnings per share (EPS) of $2.53. This performance underscores EIC’s ability to generate substantial returns for its shareholders.
The dividend stock’s diversified business model has been a cornerstone of its success. EIC operates through two primary segments: Aerospace & Aviation, and Manufacturing. This diversification not only mitigates risk but also positions the dividend stock to capitalize on various market opportunities. Over the past 19 years, EIC has achieved an average annual return of 19%, outperforming the broader TSX index by a considerable margin.
In its most recent financial disclosures, EIC announced plans to release its fourth-quarter results. Analysts anticipate an earnings per share (EPS) of $0.83 for this quarter, a notable increase from $0.70 in the same period last year. This projection reflects the company’s ongoing commitment to growth and profitability.
Future outlook
A significant development for EIC is its recent agreement to acquire Canadian North. An airline that services Canada’s Arctic regions. This strategic acquisition, announced on Feb. 24, 2025, is poised to expand EIC’s Essential Air Services and strengthen its presence in northern communities. Such moves exemplify the company’s proactive approach to growth and market expansion.
From a valuation standpoint, EIC’s stock is currently trading at $51.62, with a market capitalization of approximately $2.56 billion. The dividend stock offers an attractive annual dividend of $2.64 per share, yielding around 5.11% at writing. Notably, EIC has a history of dividend growth, having increased its payouts 17 times since 2004, distributing over $870 million in cash dividends to date.
Analyst sentiment towards EIC remains positive. The consensus twelve-month price target is $70.00, suggesting a potential upside of approximately 34.23% from the current share price. This optimism is bolstered by EIC’s consistent financial performance and strategic growth initiatives.
Bottom line
Looking ahead, EIC is well-positioned to continue its upward trajectory. The dividend stock’s diversified operations, strategic acquisitions, and commitment to shareholder returns make it a compelling option for investors seeking to maximize their TFSA contributions. As the 2025 TFSA contribution window opens, EIC stands out as a stock worth considering for those aiming to achieve both growth and income in a tax-free environment.
Taken all together, Exchange Income exemplifies a balanced blend of stability and growth potential. Its diversified portfolio, strategic expansions, and shareholder-friendly policies align well with the investment goals of many Canadians. As always, potential investors should conduct their due diligence and consider their individual financial situations before making investment decisions. But this dividend stock certainly looks like a prime choice to make more income in 2025 and beyond.
