A proven strategy to generate market-beating returns consistently is to identify a portfolio of fundamentally strong companies that trade below their intrinsic value. One such top Canadian stock that also pays shareholders a dividend is Waste Connections (TSX:WCN).
Valued at a market cap of almost $45 billion, Waste Connections is among the largest companies in Canada. It provides non-hazardous waste collection, transfer, disposal, and recycling services across the United States and Canada.
The company serves residential, commercial, municipal, and industrial customers while operating landfills, transfer stations, and intermodal facilities. It also specializes in handling waste from oil and gas exploration, including drilling fluids, contaminated soils, and spill cleanups.
In the last 10 years, Waste Connections has returned more than 500% to shareholders. Despite these stellar returns, the TSX stock is down 14% from its all-time highs, giving you a chance to buy the dip.
Is this Canadian dividend stock a good buy?
In the third quarter (Q3) of 2025, Waste Connections reported revenue of $2.458 billion, an increase of 5.1% year over year, which showcases the resilience of its solid waste business.
More impressively, when stripping out commodity headwinds and the impact of closing Chiquita Canyon landfill, underlying solid waste margins expanded by roughly 80 basis points to 34.7%.
The quarter highlighted exceptional pricing execution with core solid waste price growth of 6.3%, putting it on track for about 6.5% full-year pricing. The price growth was reported despite a 2.7% decline in volumes, which were tied to intentional shedding of low-margin contracts and sluggish construction activity.
Notably, roll-off activity showed modest improvement while landfill tons climbed nearly 3% led by municipal solid waste and special waste volumes.
Employee turnover dropped for the 12th straight quarter, now down over 55% from peak levels in late 2022 and early 2023. Safety incident rates hit new company records, falling more than 25% through multiyear improvements.
This human capital success is flowing directly to the bottom line, though management notes that they still have about a third of the expected 100 basis points in margin expansion yet to be unlocked from these retention efforts.
Waste Connections continues to target acquisitions, having closed or signed deals totalling roughly $300 million in annualized revenue year to date, including two of Florida’s largest private waste companies.
The company also bought back approximately 2.4 million shares, nearly 1% of shares outstanding, taking advantage of what it viewed as attractive market dislocations. The board approved an 11.1% dividend increase, marking the 15th consecutive year of double-digit dividend growth since 2010.
What’s next for the TSX dividend stock?
Looking toward 2026, management expects mid-single-digit revenue growth driven primarily by pricing, with about 1% revenue carryover from this year’s acquisitions.
The company anticipates above-average underlying solid waste margin expansion. However, this will be partially offset by commodity headwinds of 20 to 25 basis points and acquisition dilution of 10 to 15 basis points, resulting in overall normalized margin expansion.
Analysts forecast Waste Connections to expand adjusted earnings from $4.79 per share in 2024 to $8.24 per share in 2029. In this period, its free cash flow (FCF) is forecast to improve from $1.22 billion to $2.18 billion.
A widening FCF base should translate to higher dividends. Bay Street estimates the annual dividend to increase from $1.17 per share in 2024 to $2.43 per share.
If the dividend stock is priced at 31 times forward FCF, which is similar to the 10-year average, it should surge by more than 50% over the next three years.
