Dividend-growth investing remains one of the most reliable ways for Canadian investors to build long-term wealth, especially when combined with patience and disciplined stock selection.
While many investors gravitate toward the usual dividend stalwarts — banks and utilities — some of the most compelling dividend-growth opportunities can be found off the beaten path.
Companies with strong cash generation, disciplined capital allocation, and a willingness to reward shareholders can quietly deliver outsized income growth over time.
Two such Canadian stocks are Tourmaline Oil (TSX: TOU) and goeasy (TSX: GSY). They operate in very different industries and carry distinct risks, but both have demonstrated an exceptional commitment to growing shareholder payouts and generating strong total returns.
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Tourmaline Oil: A dividend-growth story hidden in energy
Tourmaline Oil may not be the first name investors think of when searching for dividend growth, largely because of its exposure to volatile energy prices.
As a natural gas–weighted producer — with roughly 76% of production tied to natural gas — Tourmaline’s financial results are naturally sensitive to commodity price swings. That uncertainty has kept the stock trading largely sideways since 2022, even as the business itself has continued to execute well.
Behind the scenes, however, Tourmaline has built one of the strongest dividend-growth records in the Canadian energy sector. Since initiating a steadily rising common stock dividend in 2018, the company has delivered a dividend-growth compound annual growth rate of approximately 27%.
Even more impressive, Tourmaline has paid special dividends every year since 2021. Over that period, those special payouts have totalled roughly 2.8 times the value of its regular dividends.
Investors should not assume special dividends are guaranteed. Tourmaline distributes excess free cash flow after funding operations and growth, meaning lower energy prices or higher costs could reduce or eliminate these payments. That said, the company’s underlying cost structure provides a significant margin of safety.
Tourmaline benefits from a focused position in the Montney basin, producing dense gas and liquids that deliver higher value per well. Its ownership of processing facilities further lowers operating costs, reinforcing its status as a low-cost producer.
At under $60 per share at the time of writing, Tourmaline offers a regular dividend yield of about 3.3% with the potential for dividend growth and special dividends. Analyst consensus suggests the stock trades at roughly a 16% discount, implying near-term upside approaching 20%.
goeasy: High-yield dividend growth with economic sensitivity
goeasy represents a very different type of dividend growth opportunity. As a non-prime consumer lender, its performance is closely tied to the financial health of its borrowers and the broader Canadian economy. Economic downturns, rising unemployment, or prolonged inflationary pressure can lead to higher loan delinquencies and credit losses.
Currently, goeasy’s annualized net charge-off rate sits at 8.9%, within management’s expected range of 8.75%–9.75%. While underwriting remains disciplined, early-stage delinquencies have increased, prompting higher provisions for credit losses.
Regulatory pressure is another risk. The federal government’s 2024 decision to lower the maximum allowable interest rate from 47% to 35% raised concerns, though management expects to adapt by lowering average rates to below 30% this year.
Despite these risks, goeasy’s dividend growth track record has been exceptional. The company has maintained or increased its dividend for at least 20 years. Its three-, five-, and 10-year dividend-growth rates stand at approximately 17%, 26%, and 30%, respectively — numbers few Canadian companies can match.
At around $134 per share, goeasy offers a dividend yield of roughly 4.3%. Analysts see the stock trading at a steep discount of about 34%, implying potential near-term upside exceeding 50% if sentiment improves.
Investor takeaway
Tourmaline Oil and goeasy are not traditional core dividend holdings, but that’s precisely what makes them interesting. Both Dividend Knights have outperformed the broader Canadian market in total returns and income growth over the past decade.
For investors seeking dividend growth beyond the usual suspects, these stocks can serve as satellite positions within a diversified portfolio. Accumulating shares during periods of weakness may enhance both long-term income and total return potential.
