I can understand why so many Canadians like guaranteed investment certificates (GICs). You know the interest rate when you invest, and you don’t have to check share prices every morning as some stock market investors do. But if I were investing money I wouldn’t need for several years, I’d prefer to earn regular income while giving my investment room to grow. That’s what makes quality Canadian dividend stocks so appealing. Instead of simply collecting fixed interest payments, you own a piece of a business that could expand and become more valuable over time.
In this article, I’ll talk about one top TSX-listed dividend stock that I think could be a rewarding alternative to GICs for patient, income-focused investors, as it offers an attractive yield and encouraging long-term growth prospects.
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A top Canadian dividend stock to buy for solid income
If you’re looking for a Canadian dividend payer that could deliver solid income beyond the fixed returns of GICs, Gibson Energy (TSX: GEI) could be worth considering right now.
This Calgary-headquartered company operates in the liquids infrastructure sector, mainly providing storage, processing, gathering, and other related services for crude oil and refined products. Its operations are spread across North America, with key terminal assets in Alberta and Texas.
Interestingly, Gibson Energy stock has delivered impressive returns over the last year, climbing by about 37%. With this, GEI stock currently trades at $32.02 per share with a market cap of $5.6 billion. Despite this strong rally, it still offers an attractive 5.7% annualized dividend yield, making it appealing for investors seeking reliable passive income.
But Gibson’s generous dividend yield isn’t the only reason to consider buying this Canadian energy stock. That’s because its operational performance and continued focus on expanding its infrastructure business also make it an interesting investment for the years ahead.
Strong operations support Gibson Energy’s growth
While GICs offer predictable interest payments, Gibson Energy can give long-term investors a great opportunity to earn solid dividend income while benefiting from its business expansion.
In the third quarter, the company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) jumped 31% year-over-year (YoY) to a record $193 million. This growth was mainly driven by stronger performance across its infrastructure and marketing businesses.
Notably, its infrastructure segment’s adjusted EBITDA rose nearly 15% YoY last quarter with the help of contributions from its recently acquired Chauvin assets, higher throughput volumes, and operational improvements. Meanwhile, Gibson’s marketing segment adjusted EBITDA surged to $35 million from just $6.7 million a year ago, benefiting from stronger refining margins and a diversified product mix.
These improvements also helped Gibson post a solid 69% YoY increase in quarterly net profit to $77 million, despite higher taxes and financing costs.
More importantly, its quarterly distributable cash flow climbed about 40% YoY, strengthening its ability to support dividend payouts.
Growth initiatives and dividend outlook
Besides its strong earnings growth, Gibson’s ongoing infrastructure investments could help it generate even more cash flow to support dividends in the coming years.
For example, the company recently approved its Chauvin pipeline expansion, which should increase the system capacity by about 50% by the first half of 2028. The energy firm also recently brought its Wink-to-Gateway Integration Project into service to improve network connectivity and attract additional volumes.
These growth efforts, coupled with its strong recent financial performance, make GEI stock a rewarding long-term investment.
Overall, its solid yield, improving cash flow, and promising expansion projects make Gibson stock an attractive alternative to GICs for long-term income investors.
