Valued at a market cap of $639 million, North American Construction Group (TSX: NOA) provides equipment maintenance and heavy construction services across Canada, the United States, and Australia. Its heavy construction & mining division handles various services, including project management, contract mining, overburden removal, site preparation, and reclamation.
The equipment maintenance services division offers maintenance support, including fuel servicing, repairs, component supply, and technical services. The company operates a vast fleet of heavy equipment units, serving the resource development and industrial construction sectors.
In the last 10 years, North American stock has returned 490% to shareholders. However, after adjusting for dividend reinvestments, cumulative returns are closer to 600%. Despite these outsized gains, the TSX dividend stock trades 37% below all-time highs, allowing you to buy the dip. The ongoing pullback has increased its dividend yield to 2.2%, making it attractive to income-seeking investors. Let’s see if you should own this TSX stock right now.
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Is the TSX dividend stock a good investment in 2025?
North American Construction Group delivered a strong performance in 2024. It reported revenue of $1.41 billion, an increase of 10% year over year, despite facing challenges in its Canadian operations during the first half of the year. NOA’s strategic pivot toward Australian operations and infrastructure projects has transformed its financial profile and positioned it for continued growth.
Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose by 31% year over year to $390.3 million, indicating a margin of 27.6%, up from 23.2% in 2023. The margin improvement was primarily tied to the acquisition of MacKellar in Australia, which has enhanced the overall profitability profile.
North American Construction overcame several challenges in 2025, including a 30% drop in oil sands demand, underperforming joint ventures, and wildfires in Alberta. Management’s decisive actions to ship underutilized Canadian assets to high-demand Australian markets and restructure partnerships helped turn the tide in the second half.
The Australian operations now represent the cornerstone of NACG’s business, comprising over half of annual revenue, 70% of total backlog, and more than 60% of EBIT (earnings before interest and tax).
MacKellar maintained impressive equipment utilization, averaging 83% throughout 2024, with Q4 being its highest revenue period despite significant rainfall in December. NOA secured $1 billion in new and extended contracts in Australia, including a copper mine project in New South Wales that expanded both geographic and commodity diversity.
Meanwhile, the company’s Fargo infrastructure project achieved peak annual revenue of $153 million and progressed past the 60% completion mark. Management has focused strategically on growing the infrastructure segment to 25% of annual earnings by 2027, seeing opportunities in North American and Australian markets.
Financially, NACG improved its gross profit and margin to $210.0 million and 18.0%, respectively, up from $154.8 million and 16.1% in 2023. Adjusted EPS (earnings per share) rose 32% to $3.73 from $2.83, consistent with the EBITDA growth.
Is the TSX stock undervalued?
Looking ahead, NACG expects to focus on operational excellence, improved asset utilization, and growth while strengthening its balance sheet and enhancing shareholder returns.
The company recently announced the redemption of its 5.5% convertible debentures, with $73 million of the $75 million principal converted to three million shares. It also repurchased nearly 205,000 shares under its buyback program.
North American Construction is forecast to expand adjusted earnings per share from $3.73 in 2024 to $4.34 in 2026. Moreover, free cash flow is forecast to increase to $150 million in 2026, up from $121 million in 2025.
Comparatively, its annual dividend expense is around $13.3 million, indicating a payout ratio of less than 10%. NOA has already raised its dividends from $0.08 per share in 2019 to $0.48 per share in 2025.
Priced at 6.1 times forward earnings, NOA stock is cheap and trades at a discount of 52% to consensus price target estimates.
