If you’re looking to invest around $7,000 in a Canadian stock that offers a compelling blend of both growth potential and a steady stream of income, then goeasy (TSX:GSY) warrants a closer look. goeasy specializes in providing non-prime consumer lending services through its two main brands: easyfinancial and LendCare. This particular segment of the lending market can offer significant opportunities for growth, and goeasy has established itself as a key player in this space. So, let’s dive into this smart buy.
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Showing strength
As of writing, goeasy stock trades at approximately $155 per share. With a market capitalization hovering around $2.52 billion, the Canadian stock demonstrated a consistent upward trajectory in its growth over the past several years. This steady expansion reflects the increasing demand for its financial services and its ability to effectively manage its loan portfolio.
Looking at their most recent financial results, specifically the fourth quarter of 2024, goeasy reported adjusted diluted earnings per share (EPS) of $4.45. This figure represents a solid 11% increase compared to the adjusted diluted EPS reported in the same quarter of the previous year. Furthermore, the Canadian stock’s loan portfolio experienced a substantial 26% year-over-year growth, reaching a total of $4.6 billion. This robust growth in its loan portfolio suggests that more and more Canadians are utilizing services, contributing to the company’s overall financial health.
A stellar dividend
One of the particularly attractive features of goeasy for investors, especially those seeking a regular income component to its portfolio, is its dividend. The Canadian stock has shown a commitment to returning value to its shareholders through consistent dividend payments. Furthermore, it recently announced an increase in its quarterly dividend to $1.46 per share. When you annualize this quarterly payout, it results in a total annual dividend of $5.84 per share. Based on its current stock price, this translates to a dividend yield of approximately 3.7%. For investors who prioritize income generation from their investments, a yield in this range can be quite appealing, providing a regular stream of cash flow.
goeasy’s dedication to returning value to its shareholders is further underscored by its track record of consistent dividend growth. Over the past few years, the Canadian stock has not only maintained its dividend payments but has also periodically increased them. This consistent growth in dividends reflects the company’s underlying financial strength and its confidence in its future earnings potential.
Moreover, goeasy has maintained a reasonable dividend payout ratio. By keeping this ratio at a manageable level, the Canadian stock ensures that its dividend payments are well-covered by its earnings, providing investors with greater confidence in the sustainability of these payouts over the long term. This thoughtful approach to dividend management is often seen as a positive sign for income-focused investors.
More to come
In addition to its strong financial performance and attractive dividend, goeasy has also been proactive in strengthening its balance sheet. The Canadian stock recently completed a US$400 million offering of senior unsecured notes. While this involves taking on debt, it also provides the Canadian stock with additional capital that it can use to support its ongoing growth initiatives and potentially fund future expansion opportunities. A strong balance sheet provides the company with greater financial flexibility and resilience, which can be particularly important in the lending industry.
For investors seeking a well-balanced investment offering both the potential for capital appreciation as the Canadian stock continues to grow and a steady income stream through its dividend payments, allocating $7,000 Canadian dollars to goeasy could prove to be a strategic move. The company’s solid financial performance, its attractive and growing dividend, and its positive growth prospects in the non-prime lending market all contribute to a compelling investment thesis for the long term. However, as with any investment decision, it is crucial for investors to conduct their own thorough and independent research and carefully consider their individual investment objectives, risk tolerance, and overall financial situation before making any investment decisions.
