Some TSX stocks deliver reliable dividends; a rare few deliver both outstanding income and exceptional long-term returns. And then there is goeasy (TSX:GSY) — one of the most impressive Canadian dividend growers of the past decade, yet also one of the most volatile.
Investors who choose this name must be prepared for sharp swings, but history shows that patience could be handsomely rewarded. The key, as always, is diversification: a portfolio balanced across sectors, asset classes, and risk profiles can help smooth the ride when certain stocks hit turbulence.
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A tough year for the stock
goeasy’s shares have fallen roughly 25% year to date, a painful decline for even seasoned investors. Yet this isn’t new. Whenever interest rates rise, economic stress increases, or loan-loss expectations climb, non-prime lenders like goeasy tend to suffer steep pullbacks. What matters most is whether the underlying business remains intact — and in goeasy’s case, it certainly does.
Over the first nine months of the year, the company funded $2.5 billion in loan originations, a 7% increase year over year. Its consumer loan portfolio grew 24% to $5.4 billion, while its annualized net charge-off rate came in at 8.8%, well within management’s target range and even an improvement from a year ago’s 9.2%.
Revenue rose 12% to $1.3 billion, and operating income increased 6.1% to $472 million. The headline disappointment came from net income, which fell 24% to $159 million. Earnings per share (EPS) dropped 21% to $9.47. The culprit? A sharp rise in finance costs — now 20% of revenue, up from less than 14% a year ago — as higher interest rates pressure borrowing expenses across the sector.
A dividend growth powerhouse
Despite its share-price slump, goeasy remains one of Canada’s top long-term wealth creators. Over the past decade, the stock has generated total returns of roughly 22.7% per year, enough to turn a $10,000 investment into about $77,520. Dividend investors have also enjoyed stunning growth: the company raised its dividend 24.8% earlier this year and has compounded its payout at an extraordinary 30% compound annual growth rate over the past decade.
Importantly, that growth appears sustainable. The trailing 12-month payout ratio is just 36% of net income, leaving ample room for continued increases. And based on current retained earnings, the company could theoretically cover eight years of dividends without generating a single dollar more in earnings — an impressive cushion for income-focused investors.
Trading at a rare discount
goeasy’s long-term success stems from its ability to serve a segment of Canadians who don’t qualify for traditional bank credit. Its omnichannel approach — combining physical stores, digital platforms, and third-party merchant partnerships — makes its services accessible and scalable across multiple consumer categories.
Yet the market is currently pricing the stock at a steep discount. At around $124 per share at writing, goeasy trades at a price-to-earnings (P/E) ratio of about 7.5, a meaningful 36% discount to its long-term historical valuation.
As well, its 4.7% dividend yield is double its 10-year average, giving investors an unusually attractive entry point. Analyst consensus also implies significant undervaluation of 39%.
Still not sure?
For those still hesitant, waiting until February — when goeasy typically announces its annual dividend increase — could offer added clarity. A strong dividend raise would signal continued confidence from management.But for investors seeking lasting income and long-term upside, this 25% pullback may prove to be one of the better opportunities on the TSX today.
