Finding a dividend stock with a history of hiking its payout is one of the smartest ways to build lasting wealth. It signals a dividend stock is consistently growing earnings, managing debt responsibly, and rewarding shareholders year after year. Regular dividend increases not only protect your income from inflation but also boost your yield on cost over time. Therefore, the longer you hold, the more your original investment pays you back. And above them all, this dividend stock might be a stellar option.
Source: Getty Images
HPS
Hammond Power Solutions (TSX: HPS.A) is one of those rare industrial stocks that combines growth, income, and resilience. Right now, it looks like one of the strongest dividend opportunities on the TSX. While many investors have focused on big names in energy or finance, Hammond has quietly become one of Canada’s top-performing manufacturers, consistently increasing both its earnings and its dividend.
Hammond Power builds custom electrical transformers and power systems used across industries from manufacturing and data centres to renewable energy and electric vehicles (EV). These aren’t short-term products, but mission-critical components in the electrical grid and industrial infrastructure. That makes Hammond’s business both steady and essential. As electrification accelerates worldwide, demand for transformers and energy management equipment has surged, and Hammond has been capturing that growth efficiently.
Numbers don’t lie
Financially, Hammond’s recent performance has been exceptional. In its third quarter of 2025, the dividend stock reported revenue of $218 million, the second-highest quarter for shipments ever. Net income hit $17.4 million, with its backlog now 27.7% higher than the beginning of the year. Gross margins remained strong at over 30%, with data centre activity accelerating in the quarter, making up for 53% of its backlog. This operational strength has allowed Hammond to pay down debt, strengthen its balance sheet, and reinvest in expansion — all while continuing to increase shareholder returns through dividend hikes.
And those dividends have been rising fast. Hammond has now increased its quarterly dividend multiple times over the past two years, most recently to $1.10 per share annually, representing a yield of around 0.62%. That might seem modest at first glance, but what makes it powerful is the pace of growth. The company’s dividend has nearly tripled in just three years, and with a payout ratio still at just 16% of earnings, there’s plenty of room for more hikes ahead. This combination of strong earnings growth and a conservative payout gives Hammond one of the healthiest dividend profiles on the TSX.
More to come
The dividend stock’s outlook is equally strong. Hammond continues to benefit from global electrification, renewable infrastructure, and artificial intelligence (AI)-driven data centre growth. All of these require large-scale, reliable transformers and power distribution systems. It’s expanding production capacity in both Canada and the U.S. to meet rising demand, and it’s doing so without overextending financially. This disciplined growth strategy sets Hammond apart from more volatile industrial peers. It grows within its means, ensuring that dividends remain sustainable even if the economic cycle slows.
From a valuation standpoint, Hammond still looks attractively priced despite its impressive rally over the past two years. The stock trades at roughly 22 times forward earnings, a discount to global industrial peers, even as profitability and return on equity continue to rise. For investors who prefer to buy quality companies before they become household names, Hammond offers a rare combination of growth, income, and undervaluation.
Bottom line
In short, Hammond is a dividend stock worth grabbing right now because it’s doing everything right. The dividend stock is growing earnings, increasing dividends, and capitalizing on long-term structural demand. Its management has shown remarkable consistency, its balance sheet is pristine, and its end markets are booming. In fact, here’s what a $7,000 investment could bring in today from dividends alone.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| HPS.A | $178.12 | 39 | $1.10 | $42.90 | Quarterly | $6,946.68 |
Altogether, this is a stock that doesn’t just pay you, it gives you a raise every year, all while benefiting from the global transition to cleaner, smarter power systems. For investors looking to build a reliable, growing income from an overlooked Canadian industrial, Hammond Power is exactly the kind of gem that deserves a spot in a long-term portfolio.
