The Ideal Canadian Stock for Dividends and Growth

Want dividends plus steady growth? Power Corporation offers a “quiet compounder” mix of cash flow today and patient compounding from diversified financial holdings.

Key Points
  • Power Corp is a holding company with diversified earnings and dependable dividends.
  • Recent results showed solid adjusted earnings and rising net asset value
  • Trade-offs include a holding-company discount, market sensitivity, and slower pace

When you hunt for a Canadian stock that can do dividends and growth at the same time, you want a business that feels dependable. Start with cash flow. If a Canadian stock can’t reliably generate cash, the dividend turns into a promise it can’t keep.

Then look at how management behaves when it has extra money. Strong dividend-and-growth names usually balance reinvestment with shareholder returns, and it shows up in a steady payout, sensible buybacks, and a balance sheet that does not look stretched.

Finally, keep it simple. If you can’t explain what drives revenue and profit in a sentence or two, you will struggle to hold it when the stock wobbles. That’s why today, we’re looking at this ideal Canadian stock.

some REITs give investors exposure to commercial real estate

Source: Getty Images

POW

Power Corporation of Canada (TSX: POW) sits in the “quiet compounder” corner of the TSX. It operates as a holding company. That means you don’t buy POW for one product line or one hot trend. You buy it for the collection of businesses it owns and influences, with financial services at the centre. Its biggest pieces include Great-West Lifeco in insurance and retirement, and IGM Financial in wealth and asset management, along with other investments that add diversification. This structure can feel a bit removed compared to buying a bank or insurer directly, but it also spreads your exposure across multiple earnings streams that can take turns carrying results.

That parent-company role matters because POW’s job involves capital allocation as much as operations. It collects dividends from holdings, manages its own balance sheet, and decides when to reinvest, buy back shares, or simply keep paying and raising the dividend. In good markets, wealth and asset management often look better. In higher-rate or more cautious periods, insurance earnings and spreads can matter more. You don’t get a straight line, but you can get a steadier blend.

Into earnings

For recent earnings, POW reported results for the third quarter of 2025 and the headline numbers looked solid. It reported net earnings from continuing operations of $703 million, or $1.10 per share; and adjusted net earnings from continuing operations of $863 million, or $1.35 per share. Those figures help separate core performance from one-time items. When adjusted earnings hold up, it usually signals that the underlying businesses still earn money in a normal, repeatable way, which is what you want if the dividend matters to you.

The other piece investors watch closely with a holding company is the value of what it owns versus what the market pays for the shares. POW reported an adjusted net asset value per share of $72.24, up from $60.44 at December 31, 2024. That kind of move can support the “growth” side of the story even when the stock price feels sleepy. It also highlighted ongoing share buybacks, which can quietly boost per-share value over time.

Looking ahead

The structure makes it easier to tell a balanced story: income today from dividends, plus a pathway to compounding through underlying earnings growth and capital allocation. If you want “steady progress” instead of a “rocket ship,” POW can fit the brief. It tends to suit investors who want to hold something for years, collect cash flow, and let management do the portfolio work inside the company.

The trade-off is that POW can frustrate you if you expect quick wins or if you hate complex structures. Holding companies often trade at a discount to the value of their holdings, and that discount can stick around longer than anyone wants. POW’s results still tie back to financial markets, interest rates, and how its major holdings execute, so you should not expect it to feel immune in a downturn. And while the dividend has looked dependable, every dividend stock carries the same basic risk. If earnings weaken enough, management can slow dividend growth or get more conservative. For now, here’s what $7,000 could bring in on the TSX today.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENT
POW$74.0194$2.45$230.30Quarterly$6,957.00

Bottom line

If you can live with a calmer pace and you like a mix of income plus long-term compounding, POW looks like a reasonable candidate. If you want a simpler, more direct growth story, you may prefer a single operating company instead.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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