The Small Dividend Today That Could Grow Significanlty in 20 Years

A small 1.6% yield may not look exciting today, but this Canadian stock’s growing earnings, rising dividend, and long-term investments make it really appealing for patient income investors.

Key Points
  • RB Global currently offers a 1.6% annualized dividend yield and recently increased its quarterly payout to US$0.33 per share.
  • The company's second-quarter revenue rose 11% YoY, while net profit jumped 31%.
  • RB Global is investing in technology, acquisitions, dividends, and share repurchases to support long-term shareholder value.

New investors could easily overlook a small dividend payout when the Toronto Stock Exchange is filled with stocks offering much higher yields. But long-term dividend investing is not always about collecting the biggest payout right away. A growing business could steadily increase its dividend over time, making a small starting dividend far more attractive after many years.

RB Global (TSX: RBA) could be an interesting example on the TSX today. Its less than 2% yield may not stand out among TSX dividend stocks, but rising earnings, dividend growth, marketplace investments, and share repurchases strengthen the overall investment appeal. And those qualities could matter a lot over a 20-year holding period.

In this article, I’ll explain why RB Global could be an attractive dividend growth stock for patient investors.

jar with coins and plant

Source: Getty Images

This stock with a small dividend deserves your attention

If you don’t know it already, RB Global operates global marketplaces for commercial assets and vehicles through brands including Ritchie Bros and IAA. Its platforms serve buyers and sellers across industries such as automotive, construction, transportation, agriculture, energy, and mining.

RBA stock currently trades at $114.56 per share with a market cap of about $21.3 billion. At that price, it offers a 1.6% annualized dividend yield, paid quarterly.

Although the stock has struggled lately, falling 23% over the last year, the business itself has continued to grow, making it look undervalued based on its long-term growth outlook.

The business continues to strengthen

That gap between RB Global’s recent share-price weakness and operating growth looks interesting right now. In the second quarter, the company’s gross transaction value (GTV) climbed 11% year-over-year (YoY) to US$4.7 billion, with the help of strong automotive activity and contributions from acquisitions.

For the quarter, RB Global’s total revenue also rose 11% YoY to US$1.3 billion due mainly to the 5% rise in its service revenue and 28% jump in the inventory sales revenue.

On the profitability side, the business posted a 31% YoY surge in its net profit to US$143.6 million, while its diluted earnings climbed 34% to US$0.71 per share.

Following its encouraging results, RB Global also raised its full-year 2026 GTV growth outlook to 9% to 11% from the previous range of 6% to 9%.

On the path to a bigger income story

If you’re looking at RB Global’s dividend potential many years down the road, its recent capital allocation decisions could play an important role. In July, the company increased its quarterly dividend from US$0.31 to US$0.33 per share. Then in September, it doubled the maximum value of its share repurchase program from US$500 million to US$1 billion. By September 11, RB Global had already repurchased more than 5.3 million shares under the program.

At the same time, the company continues to invest for future growth. Its subsidiary brand Ritchie Bros recently launched a redesigned mobile app that lets buyers search inventory, manage watchlists, and bid directly from their phones. During pre-launch testing, users moved from search to watchlists at more than twice the rate seen on the web platform.

In addition, RB Global is expanding through acquisitions. Its recent purchase of BigIron strengthens its position in the U.S. agriculture market while broadening its customer reach.

Considering these growth initiatives, coupled with its consistent earnings growth, marketplace investments, acquisitions, dividend increases, and share repurchases, RB Global looks like an appealing long-term dividend stock to buy and hold. Its 1.6% yield is small today, but if the business continues to grow and management keeps raising the payout over time, its dividend could grow much higher over the next 20 years.

Fool contributor Jitendra Parashar 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.

More on Dividend Stocks

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

Retiring in Canada: Create $750/Month in Dividend Income to Supplement CPP

Retiring soon? See how Scotiabank, Enbridge and XEI can generate $750 a month in dividend income to supplement your CPP…

Read more »

man touches brain to show a good idea
Dividend Stocks

1 No Brainer Buy and Hold Canadian Stock

WSP Global stock is down 27% this year, yet its backlog hit a record $20.3 billion. See why this TSX…

Read more »

Real estate investment concept
Dividend Stocks

Timbercreek Financial’s Double-Digit Yield: Is the Monthly Dividend Safe?

Timbercreek Financial's 16% dividend yield may be at risk. Understand the implications for dividend investors in this article.

Read more »

young people dance to exercise
Dividend Stocks

1 Magnificent Dividend Stock Down 33% to Buy and Hold for Decades

Groupe Dynamite stock is down over 33% from its high. See why a growth story with 69% gross margins and…

Read more »

some investments are riskier than others
Dividend Stocks

5 Top Canadian Stocks to Buy and Hold With $1,000

Get tips on buying and holding stocks with strategic insights to maximize your investment returns and manage risks.

Read more »

a person prepares to fight by taping their knuckles
Dividend Stocks

2 Defensive Canadian Stocks to Own Into Year-End

With solid fundamentals, predictable cash flows, consistent dividend payouts, and clear growth prospects, these two defensive stocks are excellent buys…

Read more »

hiker with backpack in the mountains
Dividend Stocks

2 TSX Dividend Stocks for TFSA Passive Income

The payouts of these Canadian dividend stocks are supported by strong fundamentals, stable earnings, and consistent free cash flow.

Read more »

fast shopping cart in grocery store
Dividend Stocks

What Would It Take for North West Company Stock to Pay You $1,800 a Year?

North West’s dividend can turn a portfolio into a grocery budget, though the price of getting there deserves its own…

Read more »