The best dividend stocks enable long-term shareholders to deliver outsized returns via consistent passive income and capital gains. Moreover, fundamentally strong companies with a sustainable payout ratio and a growing cash flow base consistently raise dividends, thereby enhancing yield at cost.
One such TSX dividend stock with a monthly payout is Savaria (TSX:SIS). Valued at a market cap of $1.5 billion, Savaria pays shareholders an annual dividend of $0.55 per share, which translates to a forward yield of 2.7%.
While the dividend yield might not seem attractive at first glance, the small-cap TSX stock has returned 300% to shareholders over the past decade. If we adjust for dividend reinvestments, cumulative returns are close to 430%.
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Is this TSX dividend stock still a good buy?
Savaria designs, manufactures, and installs accessibility solutions for elderly and physically challenged individuals across Canada, the U.S., Europe, and internationally.
The company operates through two segments:
- Accessibility (elevators, stairlifts, platform lifts, wheelchair-accessible vehicles)
- Patient Care (ceiling lifts, medical beds, therapeutic equipment)
These products serve residential, commercial, and healthcare markets through dealers and direct sales.
In the third quarter (Q3) of 2025, Savaria reported an EBITDA (earnings before interest, taxes, depreciation, and amortization) of 21.2%, a quarterly record. The company’s gross margins also reached a record high of 39.2%, up from 37% last year.
An improvement in profit margins showcases the two-year transformation under the Savaria One program, which focused on operational improvements, procurement efficiencies, and strategic pricing initiatives.
The Accessibility segment reported an EBITDA margin of 23.5%, while care margins stood at 18.3%. The company reported revenue of $224.8 million, an increase of 5.2% year over year, driven by organic growth and favourable foreign exchange impacts.
Savaria ended Q3 with a net debt-to-EBITDA ratio of 1.19 times, down from 1.63 times in 2024. Its free cash flow rose 51.5% year over year, allowing the company to lower its debt balance by $11.5 million in Q3.
Savaria now has approximately $290 million in available funds for future investments and acquisitions, positioning the company well for its next growth phase.
Management implemented over 60 initiatives worth millions in savings during the quarter alone, which demonstrates the sustainability of operational improvements.
The company is expanding its research and development team from 50% to 62% of its prior levels to accelerate new product development and maintain its position as the preferred choice for dealers.
What is the Savaria stock price target?
Savaria plans to unveil its five-year strategic plan in April 2026, with a focus on growth after two years of margin improvement. The company will rebrand its European operations under the Savaria name starting early next year, aligning products with North America and moving toward a true one-stop-shop model.
Management maintained full-year revenue guidance at approximately $925 million while updating EBITDA margin expectations to slightly above 20%.
The elimination of strategic initiative consulting costs in 2026 will add $0.17 per share to earnings, and provide additional momentum as it pivots toward the next phase of value creation centred on accelerating organic and acquisition-driven growth.
Analysts tracking the TSX stock forecast adjusted earnings to expand from $1.17 per share in 2025 to $1.72 per share in 2028. In this period, the free cash flow is expected to improve from $96.6 million to $133 million.
Given an annual dividend of $0.55 per share, the annual dividend expense for Savaria is around $39 million, indicating a payout ratio of over 40% in 2025, which is sustainable.
If Savaria stock is priced at 16 times forward earnings, which is similar to its current multiple, it should gain 30% from current levels over the next two years. If we adjust for dividends, cumulative returns could be roughly 36%.
