While most investors shy away from risk, contrarians quietly prepare for opportunity. That’s exactly why goeasy (TSX:GSY) — a stock down roughly 20% from its highs — is on my radar as the contrarian buy of the year. Behind its recent dip lies a powerhouse of growth, profitability, and dividend expansion that’s simply too compelling to ignore.
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A decade of explosive growth
goeasy has been a remarkable Canadian success story. Over the past decade, the company’s adjusted earnings per share (EPS) have surged from $1.34 to $16.71, representing a compound annual growth rate (CAGR) of nearly 29%. That kind of consistent high growth in profits is rare in the financial sector.
Investors who recognized this growth early have been richly rewarded. Including dividends, goeasy’s total return has averaged about 27% annually over the past 10 years — enough to turn a $10,000 investment into more than $100,000. This makes it one of the top-performing stocks on the Toronto Stock Exchange (TSX) over the last decade.
And the dividend story is just as impressive. With a 10-year dividend growth rate of 30%, goeasy ranks as the fastest dividend grower on the TSX in this period. That streak of increases, plus its last dividend hike of nearly 25% in February, reflects management’s confidence and the company’s ability to generate strong, sustainable profit.
Volatile but profitable
Still, investors must recognize that goeasy isn’t for the faint of heart. As a non-prime lender, it operates in a higher-risk segment of the credit market. The company targets a net charge-off rate — the portion of loans unlikely to be repaid — between 8.75% and 9.75%, and recently reported 8.8%, which comfortably sat within the range. Despite this, goeasy has delivered a median return on equity (ROE) of about 20% over the past decade — an exceptional level of profitability.
That said, regulatory pressures are a constant challenge, with government regulation capping the maximum interest rates it can charge. And as a riskier financial stock, goeasy can be highly volatile during economic downturns, as fears of rising unemployment make investors nervous about non-prime borrowers.
Yet, these very downturns often create the best opportunities. When the economy weakens, traditional banks tighten their lending standards, and many near-prime borrowers migrate toward lenders like goeasy. For investors with patience and a long-term mindset, those periods of pessimism can be the perfect time to buy.
A dividend gem at a discount
At the current price of $171.53 at writing, goeasy trades at a blended price-to-earnings (P/E) ratio of roughly 9.8, well below its historical average, equating to a discount of approximately 17%. Its dividend yield of 3.4% is also roughly 50% higher than its 10-year average yield of 2.3%, suggesting the stock is attractively valued.
Yes, goeasy carries higher risk than blue-chip dividend stocks. But it also offers exceptional growth potential, supported by a proven business model, disciplined credit management, and an unmatched track record of shareholder returns.
For investors willing to embrace higher volatility, this stock offers the rare combination of income, value, and growth — a trifecta that doesn’t come around often.
Investor takeaway
With its 20% pullback, double-digit growth potential, and one of the best dividend records on the TSX, goeasy is my top contrarian buy for 2025 — a stock to buy now and add more on weakness (though, as a non-core or trading holding due to the higher-risk nature of its business).
