Investing in dividend stocks with a growing payout allows you to generate returns via passive income and share price appreciation. In this article, I have identified one top TSX dividend stock that offers you a yield of 2.5%.
Valued at a market capitalization of $1.62 billion, Savaria (TSX:SIS) provides accessibility solutions for elderly and physically challenged individuals in Canada, the United States, Europe, and internationally.
It has two primary business segments:
- Accessibility: This business designs, manufactures, distributes, and installs accessibility products such as commercial and home elevators, stairlifts, platform lifts, and dumbwaiters for personal, residential, and commercial applications. This segment also offers a range of wheelchair-accessible motor vehicles and adapted vehicles for individuals with special needs.
- Patient Care: This segment designs, manufactures, distributes, and installs ceiling lifts, patient transfer slings and accessories, floor lifts, standing aids, bathing equipment, medical beds, therapeutic support surfaces, and pressure management products used in healthcare facilities and home care settings.
While the 2.5% yield may not seem attractive, the TSX stock has returned nearly 450% in dividend-adjusted gains to shareholders over the past decade. These returns balloon to 2,200% if we extend the investment horizon to 20 years.
Let’s see if this small-cap stock is still a good buy right now.
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The bull case of investing in this dividend stock
In the third quarter (Q3) of 2025, Savaria reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin of 21.2%, above the management target of 20%. It grew sales by 5.2% year over year to $224.8 million, driven by organic growth and the impact of foreign exchange rates.
Its gross margins expanded by 220 basis points to 39.2% due to operational improvements, procurement efficiencies, and strategic pricing initiatives implemented under the Savaria One transformation program.
The Accessibility segment reported an EBITDA margin of 23.5%, benefiting from strong contributions across North America and Europe. Patient Care margins came in at 18.3%, which is lower than last year but still improved.
Savaria ended Q3 with a net debt-to-EBITDA ratio of 1.19 times, down from 1.63 times in 2024. A lower leverage ratio provides an additional $290 million in liquidity, which can be used for future investments and acquisitions.
Savaria maintained full-year revenue guidance at approximately $925 million while raising adjusted EBITDA margin expectations to slightly above 20% for the full year.
The Savaria One program concludes at year-end, eliminating $4.7 million in quarterly strategic initiative expenses and adding approximately $0.17 per share to earnings starting in 2026.
Management plans to unveil its five-year Savaria Phase 2 strategy at an investor day in April 2026, with renewed focus on accelerating organic growth.
Is this TSX dividend stock still undervalued?
Analysts tracking Savaria forecast revenue to increase from $868 million in 2024 to $1.08 billion in 2028. During this period, adjusted earnings are expected to increase from $0.90 per share to $1.64 per share. If the TSX stock is priced at 16 times forward earnings, it could return 18% over the next two years. If we adjust for dividends, cumulative returns will be closer to 23%.
Savaria is also forecast to increase its free cash flow from $100 million in 2024 to $133.2 million in 2029. Given its outstanding share count, Savaria’s annual dividend expense in 2025 is expected to be approximately $40 million, indicating a sustainable payout ratio.
Savaria has increased its annual dividend per share from $0.32 in 2017 to $0.53 per share in 2024. The company should raise this payout to $0.60 in 2027, which will significantly enhance yield at cost.
