A yield below 3% might not sound exciting. But here’s what most investors miss: the best dividend stocks aren’t just about today’s payout. It’s essential to invest in companies that raise their dividends consistently each year while also offering potential upside via capital gains.
This combination of income and growth is the real engine of long-term compounding. Exchange Income Corporation (TSX:EIF) has delivered exactly that for over two decades, making it one of the most overlooked income and growth stories on the TSX.
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Is this TSX dividend stock a good buy?
Exchange Income is not a simple company to describe, and that’s part of what makes it interesting.
Headquartered in Winnipeg, Canada, it operates through two segments.
- The first is Aerospace and Aviation, which includes essential air services, medevac operations, charter and freight flights, intelligence, surveillance, and reconnaissance (ISR) services, and aircraft leasing.
- The second is Manufacturing, which covers composite matting, multi-storey window systems, precision parts, and specialty equipment for the energy and telecommunications sectors.
The keyword here is “essential.” Most of what Exchange Income does is not optional. Remote northern communities in Canada depend on their airlines for medical evacuations and basic supplies. Governments rely on their ISR aircraft for maritime surveillance. Hospitals and construction crews depend on its specialty manufacturing products.
That essential nature is what gives the business its durability. CEO Mike Pyle made the point plainly on the company’s Q3 earnings call. “EIC was built on the concept that not everything is going to be perfect at the same time,” he said.
When aviation was hit hard by COVID-19, the window business kept the company afloat. When windows slowed in 2025, aviation and manufacturing picked up the slack.
That resilience is rare. And it’s the foundation on which the dividend has been built.
A strong performance in Q3
Exchange Income set all-time quarterly records for revenue, adjusted EBITDA (earnings before interest, tax, depreciation, and amortization), free cash flow, free cash flow less maintenance capital expenditures, net earnings, and adjusted net earnings: all in the same quarter.
- Revenue came in at $960 million.
- Adjusted EBITDA hit $231 million.
- Free cash flow reached $171 million, up from $136 million a year earlier.
- Earnings per share rose to $1.32 from $1.18 in the prior period.
- Adjusted net earnings per share climbed to $1.46 from $1.29.
The annual dividend was raised from $2.64 to $2.76 per share, up 5% year over year. It was the 18th dividend increase since 2004. Over that same period, Exchange Income has distributed more than $1 billion in total cash dividends to shareholders.
At the current annualized rate of $2.76, the stock yields approximately 2.7%. That payout comes every single month.
What’s next for EIF shareholders?
Management guided for 2026 adjusted EBITDA of $825 million to $875 million. That alone represents roughly $100 million of growth over 2025.
Here’s the critical detail: that guidance assumes no new acquisitions, no new contract wins, and no significant growth capital beyond what’s already underway.
In other words, the floor is already set. Everything else, which includes a potential Australian maritime surveillance contract, expanded Canadian government defence spending, ISR opportunities in Europe and Southeast Asia, and the ramp-up of a new composite mat facility, is upside that isn’t priced in.
Over the past 18 years, the TSX dividend stock has returned more than 3,300% to shareholders after adjusting for dividend reinvestments. That track record puts it in the top 10 of all TSX stocks by shareholder returns.
A 2.7% yield, paid monthly, backed by that kind of growth story, is a combination worth taking seriously.
