One of the best parts about investing is getting a juicy dividend payment. These rewards for investing can supercharge a portfolio beyond just growth alone, to provide a healthy long-term income. And there’s no shortage of options to choose from, including this very best Canadian Dividend stock.
This best Canadian dividend stock is a name you may never have heard of, but will likely never forget.
Introducing the best Canadian dividend stock for your portfolio
In case you’re wondering, that dividend stock is none other than Exchange Income Corporation (TSX:EIF).
Exchange is an acquisition-focused company that owns over a dozen subsidiary companies, classified into aviation and manufacturing segments.
Across both groups, those subsidiaries have two key elements in common. First, they provide a necessary service in space with limited or no competition. Perhaps more importantly, they also each generate cash for the parent company.
Examples of this from the aviation segment include Canada’s largest flight school and airlines providing passenger and cargo services to the remote parts of Canada’s north.
Turning to the manufacturing side of the business, examples include cell tower fabrication and custom manufacturing services to the defence sector.
The result is a well-diversified mix of businesses that generate cash for the parent company. And that cash generation allows Exchange to invest in additional acquisitions while paying out a generous dividend.
Exchange’s approach to expansion is, in a word, brilliant. By targeting niche market players that provide a necessary service, Exchange is avoiding the more volatile parts of the market that could be impacted by market fluctuations.
In other words, Exchange is building a solid defensive line of businesses that will continue to generate cash, and by extension, dividends.
Let’s talk about that dividend
Exchange’s monthly dividend is a key reason why the company is regarded as one of the best, if not the best, Canadian dividend stocks (that you’ve probably never heard of).
Exchange provides investors with a tasty monthly payout, which, as of the time of writing, works out to an impressive yield of 4.21%.
This means that a $30,000 investment in the stock will generate an income of $100 per month. Keep in mind that investors who aren’t ready to draw on that income yet can choose to reinvest those dividends.
Even better, investors who purchase this best Canadian dividend stock within a TFSA can avoid the income being viewed as taxable. And this still means that any eventual income will continue to grow until needed, all on autopilot and tax-free.
It’s also worth noting that Exchange has provided investors with near annual bumps to that dividend going back two decades. The company has also registered 17 annual increases to that dividend in the past 20 years.
Is Exchange the best Canadian dividend stock?
Exchange has a lot of great things running for it. The company boasts a well-diversified business of over a dozen subsidiaries. It also offers stellar free cash flow generation from those businesses and continues to invest in additional growth initiatives.
Finally, Exchange pays out a very tasty, well-covered and growing monthly dividend.
In my opinion, Exchange should be a core holding in any well-diversified portfolio.
Buy it, hold it, and watch your future income grow.
