Dogs of the TSX – Beat The TSX! 2025

What if you could beat the Canadian market by selecting ten stocks each year? The Dogs of the TSX strategy gets its name from the Dogs of the Dow, an investing technique well-known in the U.S. for selecting the “dogs” (paying a higher dividend yield) of an index.

The Dogs of the TSX, or Beat the TSX (BTSX) strategy, was developed by a professor named David Stanley. He suggested that you could beat the index by selecting the highest dividend yielders of the TSX each year.

If you are tired of losing money on bad stocks, this strategy could help you quickly build a solid core portfolio.

The Dogs of the TSX in a Nutshell

One of the BTSX’s main advantages is its easy implementation. You can start trading with four simple steps:

#1 List the TSX 60 index by dividends. The TSX 60 is the index of the 60 largest Canadian companies. Most of them are blue chips like banks or telecoms and pay dividends.

#2 Select the top 10 yielding stocks from the TSX 60. The ten most generous stocks are called the dogs of the TSX. As they offer the largest yields, they haven’t performed well the year before. Therefore, their yield is higher, and you buy them at a relatively low price.

#3 Buy the top 10 yielding stocks in equal weight. Boom! You build your core portfolio for the year! The strategy is based on buying the dogs in January.

#4 Each January, review the new Dogs of the TSX and trade accordingly. Each year, you must do steps from #1 to #3 to ensure you always have the highest Canadian yield stocks.

The Dogs of the TSX (BTSX) Stocks List 2025

Here’s the list of the top 10 yielding stocks from the TSX 60 for this year. All you have to do is invest an equal amount of money in each dividend stock to build your portfolio.

	COMPANY	SYMBOL	PRICE	DIVIDEND	YIELD
1	Bell	BCE.TO	$34.07	$3.99	11.71%
2	Telus	T.TO	$20.56	$1.61	7.83%
3	Enbridge	ENB.TO	$63.88	$3.77	5.90%
4	Algonquin Power	AQN.TO	$6.32	$0.36	5.70%
5	Bank of Nova Scotia	BNS.TO	$74.53	$4.24	5.69%
6	Emera	EMA.TO	$54.36	$2.90	5.33%
7	Pembina	PPL.TO	$52.55	$2.76	5.25%
8	Power Corp	POW.TO	$43.31	$2.25	5.20%
9	Canadian Natural Resources	CNQ.TO	$44.43	$2.25	5.06%
10	TD Bank	TD.TO	$66.14	$3.28	4.96%

30 Years of Outperformance for BTSX

Matt from Dividend Strategy is doing a monk’s work to keep track of this strategy. Shockingly, The Dogs of the TSX has outperformed the market for 30+ years!

I must add that it did not beat the market in 2023 and 2024. While the results were just 1% apart in 2023, we can see a difference of 4% in favor of the market in 2024. The narrowed sector allocation of this strategy can explain this. I have given more thought to BTSX’s recent performance in the episode below.

As shown below, the average for five years and more still exceeds the market. In 2024, pipelines in the BTSX portfolio highly compensated for other losers.

Average rate of return over time graph. Source: Dividend Strategy.

Why the BTSX Portfolio Works so Well?

I was a bit skeptical when I heard of this strategy at first. It’s unlikely that such a simple strategy would outperform the market consistently. I’ve done my research to understand the success rate behind the BTSX strategy.

#1 Buying blue-chips quality stock. The TSX 60 refers to the 60 largest stocks in Canada. Chances are, those companies will be around for a while.

#2 Canadian stocks have a great history of paying and increasing dividends. There are many dividend aristocrats among the TSX 60. Dividend growers tend to outperform the market over a long period.

#3 Buy low, sell high. The Dogs of the TSX is based on a classic investment principle: buy when stocks are low and sell them at a higher price. By rotating your portfolio each year with the new “dogs”, you ensure to buy the best stocks at the lowest price while selling those with a great return over the past 12 months.

#4 It’s relatively easy to beat the Canadian market. The fact that the BTSX is working isn’t necessarily an achievement. The Canadian market is heavily concentrated in two sectors: Financials and Energy. By investing in other sectors, you can easily beat the TSX.

Use This List Instead

Actually, you could beat the TSX using a list of well-diversified dividend growers that are leaders in their industry. I have built a list of them for you to download for free using this strategy and the tools at Dividend Stocks Rock. Enter your name and email below to get your spreadsheet with filters.

Why I Don’t Use the Dogs of the TSX Strategy

Investors can beat the TSX with an easy-to-use and straightforward strategy. Why am I not using the Dogs of the TSX for my portfolio?

#1 Know what you hold and why you hold it. It is one of the foundations of my investment model. I prefer researching and understanding a company’s business model before I add it to my portfolio. Buying stocks based on an index and a dividend yield seems too simplistic. It won’t hold very well during market crashes.

#2 Sector concentration. The BTSX forces you to buy only ten stocks based on the dividend yield regardless of the sector. The Dogs of the TSX 2022 shows 30% of financial companies and 30% of energy stocks. With 2/3 of your money invested in two industries, your portfolio is subject to intense volatility.

#3 Transaction costs and taxes. Rotating your stocks each year could trigger several transactions and prevent you from deferring tax on capital gains. This will have a severe impact on your returns in a non-registered account. Investing in the Dogs of the TSX in an RRSP or a TFSA account is best.

#4 I already beat the TSX. I’ve been a dividend growth investor since 2010. My years of experience in the financial industry and research helped me build a proven investing strategy. My results are not only better than the TSX, but they are also better than the BTSX strategy. Therefore, I don’t see any reason to change something that already works.

I have created a mock portfolio of the 2025 BTSX using the Dividend Stocks Rock PRO Dashboard just to see how it would look. Not only is it highly concentrated, but it includes many companies with poor ratings, such as Bell (BCE.TO) with a PRO Rating of two and a Dividend Safety Score of one, and Algonquin (AQN.TO) with two for both ratings.

BTSX Sector Allocation and Stocks Ratings powered by DSR.

If you’d like to have more details on my investment thesis for the companies part of the Dogs of the TSX, I have reviewed them in this episode.

Exclusive List of Dividend Growers with More Potential

There is another way to beat the TSX with more conviction. It is to invest in companies that show revenue growth, earnings per share (EPS) growth, and dividend growth. Selecting well-diversified holdings with growth metrics ensures your portfolio will beat the market for decades!

To help you build a solid portfolio, I have created the Canadian Rock Stars List, showing over 300 companies with growing trends.

Enter your name and email below to get the instant download in your mailbox.

Canoe Income Fund (EIT.UN.TO) Review – 2024

Canoe EIT Income Fund is a Canadian closed-end investment trust. The investment objective of the Fund is to maximize monthly distributions relative to risk and maximize net asset value while maintaining and expanding a diversified portfolio. In other words, EIT has been created to take your money, manage it, and distribute juicy monthly dividends to help you manage your retirement budget.

Learn how to create a recession-proof portfolio. Download our free workbook now!

What Canoe Income Fund looks like

The Canadian fund includes 47.3% (7% less than last year) of Canadian equity stocks, 50.4% (+7%) of U.S. stocks, 5.58% (you read that right, the website shows 103% of the money invested…that’s probably linked to leverage.) of international equity, and 0% (in line with last year) cash. Despite having less than 50% of its assets invested in Canadian firms, its sector breakdown is heavily concentrated in financials, energy, and materials (55.98%).

Source: EIT website

Top-25 Holdings

They have an impressive diversification of stocks from low yield to high yield with various safe stocks and other quite speculative securities. The fund has greatly diminished its exposure to the energy sector, as they have made the smart move of cashing in on many of their gains in that sector.

Another interesting point is the amount of turnover in the fund when we compare their top holdings from August 2023. I have highlighted (in green) 9 positions out of 25 (36%) that are not in the top 25 this year. Last year, it was 12 positions for a 48% turnover rate.

But my opinion does not really matter if the fund helps you retire happily. Let’s look at what does really matter though and that is how the fund’s money has been managed over time and how much you profit (or not) from the management team led by Rob Taylor, CPA, CA, CFA (yes, he needs 2 business cards to include all his titles!).

Secure your retirement. Download our Recession-Proof Portfolio Workbook.

Performance & Distributions

From their website, we can see that EIT has outperformed the TSX on a consistent basis (which was not the case prior to 2020). Their focus on the energy and basic materials sectors clearly paid off after the pandemic and now the fund has moved to other sectors.

However, I don’t particularly appreciate that they only use the TSX as their benchmark and ignore the S&P 500. With 50% of their portfolio invested in the U.S., it seems only fair to include U.S. and international components to their benchmark measures.

Just for fun, I ran the calculations using a portfolio with 47% XIU.TO, 50% SPY and 3% XEF.TO (for international equity) for the past 10 years, 5 and 3 years. Results include dividends and are as of 7/31/2024 to match their website.

CAGR: 10yr: 10.44%, 5yr: 12.72%, 3yr: 8.6%.

This is quite interesting, as our conclusions in 2021 and 2020 were not the same. The first two times we analyzed the fund, it had underperformed the index portfolios we created. This time, it is quite the opposite. You can see that change occurred around mid-2021 where Canoe started to surge while indexes reached a plateau and eventually decreased in 2022.

The idea of having a high-yield investment (EIT.UN.TO pays 8.5% yield at the time of writing) where distributions are paid monthly is quite interesting. If you reinvest the distribution, you could beat the market, which is quite impressive! Strangely enough, EIT.UN.TO returns are now quite similar to my personal portfolio.

The lesson here is that conclusions and returns can vary from one year to another. We will review Canoe again next year. The Canoe fund could be an interesting way to generate a high income from your investments. However, if you cash this distribution, make sure you realize two things:

#1 Your capital will not likely grow over time

#2 Your dividend will not likely grow over time

Therefore, it’s an interesting investment vehicle for income, but that income is not inflation-proof. In fact, you receive a lot less today than 10 years ago. If you reinvest the dividend in the fund, then, you get a good total return. However, you don’t get to cash the dividend to fund your retirement.

Do you see how we run into circles?

Canoe and the habit of issuing more shares

Another interesting point is that Canoe has continuously issued more units year after year since 2018. This is great for raising money to invest and capture opportunities. However, it’s not that great when you consider that it increases the amount to be paid in dividends each year.

With this kind of structure, it looks like Canoe will do well as long as we are in a bull market. If units start to tumble, Canoe will have difficulty issuing more shares to invest and pay the current dividend. This could put serious pressure on Canoe’s ability to maintain its generous distribution.

Final Thoughts

Canoe EIT income fund is not the worst investment in the world. In fact, it generated decent returns considering its dividend. While recent performance has been impressive, the fund is not perfect. First, ownership of this fund does not avoid value fluctuations when the market is shaky. If you looked at your portfolio value during corrections Canoe did not save you from headaches.

The only thing that is “guaranteed” is the dividend payment… until it isn’t. Does any Canadian remember Financial Split Corp (FTN.TO) or Dividend 15 Split Corp (DF.TO)? They were both famous for their high yields and super solid investment strategy. I will leave it to you to research them today if you are curious. Did I ever tell you there is no free lunch in the world of finance and investments?

Canoe looks good today, but it was not the same story three years ago. Can it show more consistency going forward? Only time will tell.

The Canadian Dividend Stock to Buy in September 2024

The Canadian Dividend Stock to buy in a Nutshell

Franco Nevada operates a royalty-based business model in stable countries such as the U.S., Canada, and Australia.
The company owns a wide portfolio of development projects to fuel future growth.
The closing of Cobre Panama mine since Nov 2023 is an opportunity for investors.

Selecting a gold stock for your top Canadian Dividend Stock to buy in September, Mike? Haha! I know, right? But this one qualifies to be an exception as it shows a great opportunity for dividend investors.

What’s the problem? Production at Cobre Panama has been halted since November 2023. Cobre Panama generated $223M in revenue for Franco-Nevada in 2022 and $248.9M in 2023, making it its most productive (in term of revenue) asset last year.

What is going to happen with the mine is still a mystery. However, FNV business model remains robust and the fact it has no debt will make it easier for management to navigate through trouble waters.

Let’s take a deeper look at it!

Franco Nevada Business Model

First Franco-Nevada is a streamer (meaning it gets royalties paid by mining companies instead of spending lots of capital in exploration and operations). Second, FNV has no debt. So it’s basically sitting on quality assets and reaping rewards like operating a cash printing machine. Here’s a summary of its portfolio:

Franco Nevada assets

Source: August 2024 presentation

Franco Nevada diversification

The company focuses 75% on precious metals (mostly gold with some silver) with a little bit of oil & gas and most of its assets are held in Americas.

Its revenue will fluctuate according to commodity prices, but the company has little expenses compared to a classic precious metal miner.

Investment Thesis

Franco-Nevada doesn’t waste its time operating mines, but rather manages a portfolio of royalty streams. The company owns 64,000 square kilometers of geologically prospective land but will let gold miners spend their own time and money on exploration. Once the miners find worthwhile materials, the royalty will intervene; we like this cash-flow-focused business model.

As FNV is a play on gold and precious metals, it enjoys stronger cash flows when gold prices surge. The company exhibits unparalleled portfolio diversification, offering shareholders some peace of mind in volatile markets. Finally, FNV has virtually no long-term debt. This is an interesting play if an investor is in it for the long game.

However, please note that the company is currently running with conflicts with the Government of Panama (around Cobre Panama). The upcoming Panamanian election on May 5th was highlighted as a critical event. Franco-Nevada expressed hope that the election could lead to a new dialogue with the incoming government, which might facilitate resolving the issues at Cobre Panama. However, it was noted that the new government would not officially take office until July.

This increases the level of risk (more in the potential risks section).

Are you struggling to buy stocks?

The more I read, the more I get confused. There is nothing more frustrating than being on the fence of buying… but never clicking on the buy button.

I once had a lump sum of money to invest and found it hard to narrow down my choices to a few stocks. Building a portfolio and buying stocks while the market sends mixed signals isn’t easy. That’s why I created the Dividend Rock Stars list based on the combination of three metrics creating the dividend triangle.

It’s a stronger list compared to the dividend aristocrats as I combine various metrics on top of dividend growth. By filtering the market to find stocks showing growing sales, growing earnings and growing dividends, we are convinced we can pick among the best Canadian dividend stocks, period. Enter your email below to get the list for free.

Dividend Growth Perspective

Franco-Nevada has been a Canadian dividend stock since its IPO in 2008. Unfortunately, its very low dividend yield will not pay an investor’s utility bills. For that reason, many may decide to pass on it for their retirement portfolios. The company pays its dividend in USD. This is obviously a play on growth and not just income. The company has a strong dividend triangle, and an investor can expect further dividend increases in the coming years. In early 2023, FNV announced another dividend increase of 6% (from $0.32/share to $0.34/share). Again, in 2024, FNV increased its dividend by another $0.02 to $0.36/share (5.9% increase).

Franco Nevada assets dividend triangle

We can see the impact of Cobre Panama closing on its dividend triangle as both revenue and EPS have been affected.

Potential Risks

The company employs a strong business model and relies on royalties rather than being directly linked to commodity price fluctuations. Nonetheless, an investor can expect turbulence when the gold price drops; it’s highly cyclical. As a royalty-based company, FNV is subject to various tax and regulatory risks. Since it receives royalties from several countries, a change in regulation could lead to a change in distribution.

The company is running into legal issues with the Government of Panama. Panama’s Supreme Court declared First Quantum’s Cobre Panama mining contract to be unconstitutional on November 28th. Mining operations were essentially shut down late last week. First Quantum (the mine’s operator) along with FNV initiated arbitration proceedings under the Panama/Canada Free Trade Agreement.

Franco-Nevada expressed hope that the election could lead to a new dialogue with the incoming government, which might facilitate resolving the issues at Cobre Panama. It is clearly testing investors patience.

Final thought

Franco Nevada is a strong Canadian dividend stock, period. While the situation in Panama is a concern, I see it more as a buying opportunity for investors. The rest of the company is well, and Franco Nevada shows no debt. Worse, FNV won’t get royalties from this mine for a while, which will slow down the company’s short-term growth. However, five years from now, I doubt it will significantly impact Franco Nevada’s ability to generate cash flow.

Top 5 Canadian Dividend Stocks to Celebrate

I just published my top 5 Canadian Dividend Stocks for 2024 on the Moose on the Loose for Canada Day!

Since 10 minutes is not much to explore those 5 business models, I thought of giving you more details on each of them.

Waste Connections (WCN.TO)

5-Yr Revenue Growth	11.15 %
5-Yr EPS Growth	8.20 %
5-Yr Div Growth	13.50 %

Waste Connections has refined its expertise in acquiring and integrating smaller players in the same industry. Its business model is recession-proof as solid waste is a given regardless of the economic cycle. We also like the fact that WCN offers a recurring service and is fully integrated. Management has been adept in integrating their acquired companies. Therefore, the business is not only growing but also becoming more profitable. The company has the size to enjoy the resulting economies of scale. Its dividend payment is low, but its dividend growth is strong. Unfortunately, lower-yielding stocks are usually not a good match for the dividend discount model. Unfortunately, you must pay a steep price for quality, considering a PE of 57 and a forward PE of 63. Remember that WCN 5-year average PE is also in that range (65). Therefore, you will not get a good deal anytime soon for this amazing Canadian dividend grower.

TMX Group (X.TO)

5-Yr Revenue Growth	7.80 %
5-Yr EPS Growth	4.65 %
5-Yr Dividend Growth	9.60 %

TMX has worked very hard to diversify its business through derivatives, technology, and data analytics over the past few years. TMX enjoys strong barriers to entry with regulations to generate cash flow while investing its surplus in growth vectors. It disposed of many of its non-core businesses during 2016 and 2017 and, from a regional infrastructure provider, transformed itself into a global technology solutions provider. Recurring revenue now accounts for more than half of total revenues, growing from 40% five years ago. As an exchange, TMX gathers information on the market. Many institutions are prepared to pay good prices to subscribe to such a data feed. This will be a great way to generate recurring revenues going forward. We can see interesting trends from revenue and earnings, which strengthen the dividend triangle.

Intact Financial (IFC.TO)

5-Yr Rev. Growth	15.85 %
5-Yr EPS Growth	7.85 %
5-Yr Dividend Growth	9.45 %

IFC is one of the best managed P&C insurance companies in Canada. Through a strict underwriting process and careful portfolio management, IFC has proven its value to investors over time. Due to its size, IFC benefits from ample amounts of data to improve its underwriting. This also allows IFC to enter smaller niche insurance markets that are usually more profitable. Since the insurance market in Canada is quite fragmented, there are plenty of opportunities for growth in the coming years without any real threats to the IFC business model. The acquisition of OneBeacon opened the door to U.S. business and reinforces IFC’s ability to underwrite insurance for smaller businesses. Intact did it again with the acquisition of RSA insurance for $1.25B in late 2020. In 2023, IFC and RSA acquired Direct Line Insurance Group plc’s brokered commercial lines operations to expand its business in the UK.

Intact Financial expects to continue capturing growth opportunities, aiming for a 10% net operating income per share growth over time and to consistently outperform the industry ROE by at least 500 basis points annually. Intact Financial is focusing on expanding its digital capabilities to enhance customer experience and operational efficiency. The company is also investing in data analytics and artificial intelligence to improve risk assessment and underwriting processes.

Have you noticed something?

If you look at those three Canadian dividend growers, you will notice they have three things in common:

They all offer a low yield and a high dividend growth policy.
They all show a strong dividend triangle. Those Canadian companies are thriving.
They all show great total return performance in the past 10 years.

The future looks bright for those companies as they operate sound businesses with robust financial metrics. We wish they were in our portfolio to enjoy the past ten years of growth. You may feel like you missed a great opportunities, but there are several companies showing a similar profile.

Do you want to find more companies like this?

My investment strategy has been built around low yield, high dividend growth companies showing strong dividend triangles. I wrote this guide to help you find those and build a stronger and safer portfolio for your retirement. You can download it here:

Canadian Natural Resources (CNQ.TO)

5-Yr Revenue Growth	12.90 %
5-Yr EPS Growth	28.65 %
5-Yr Dividend Growth	22.50 %

In a world where the West Texas Intermediate (WTI) would always trade at $75+ per barrel, CNQ would be a terrific investment. It is sitting on a large asset of non-exploited oilsands and reaches its breakeven point at a WTI of $35. What cools our enthusiasm is the strange direction oil has taken along with the fact that oilsands are not exactly environmentally friendly. Many countries are looking at producing greener energy and electric cars. This could slow CNQ’s ambitions. However, CNQ is very well positioned to surf any oil booms. The stock price has more than doubled in value since the fall of 2020. It has previously invested very heavily, and it is now generating higher free cash flow because of past capital spending. CNQ exhibited resilience in 2020, and this merits a star in their book! If you are looking for a long-term play in the oil & gas industry, CNQ appears at the top of our list at DSR. We also appreciate CNQ’s shareholder-friendly approach, as it will return 100% of free cash flow to shareholders after hitting $10B in net debt.

CCL Industries (CCL.B.TO)

5-Yr Revenue Growth	5.20 %
5-Yr EPS Growth	2.50 %
5-Yr Dividend Growth	15.30 %

It is quite rare to find an international leader with a well-diversified business based in Canada. Through the major acquisition of business units from Avery (world’s largest supplier of labels) in 2013, the company has set the tone for several years of growth. Bolstered by its previous successes, CCL also bought Checkpoint, a leading developer of RF and RFID, and Innovia in the past few years and announced more acquisitions in 2021. The company is still able to generate organic growth (roughly 4-5%) on top of its growth through acquisitions. You can also rest assured that management’s interests are aligned with yours since the Lang family still owns 95% of CCL’s A shares with voting rights. We appreciate CCL’s capital allocation that includes a mix of dividend, share buybacks, acquisitions and CAPEX. Now that the stock price has returned to normal levels, the company exhibits an attractive PE ratio and can still generate more growth through acquisitions

Low yield, high dividend growth stocks are safer

Focusing on companies with strong financial metrics will help build a more sustainable income for retirement. Once you identify the key elements that made that business thrive, you will be in a better position to determine if the story will continue.

Start seeing your portfolio as your “big” holding corporation like Warren Buffet. Create your own dividend and keep a cash reserve for the bad days. This is how you create a dividend income for life.

Thomson-Reuters (TRI.TO) – Anything but Boring

Thomson-Reuters (TRI.TO) seems pretty boring. After all, software and services for lawyers, accountants, and corporations don’t make us jump to our feet excitedly. However, with a market cap of $110B CAD, 31 consecutive years of dividend increases, and 5-year total returns of 200%, Thomson-Reuters is an industrial stock that is anything but boring.

You can also listen to Mike’s podcast.

Formed in 2008 with the merger of Thomson and Reuters, TRI.TO is mostly known to the general public for its news service and media, but this only represents a few percentage points of its total revenue. Thomson-Reuters’s largest business is selling complex software and services for the legal profession (42% of its revenue), accounting profession (20-25%), and corporations (20-25%). The company was also in the financial data service, with Refinitiv, which it sold to the London Stock Exchange in 2019.

TRI’s Legal Professionals segment sells research and workflow products to law firms and governments. The Tax & Accounting Professionals segment does the same, but for tax, accounting and audit professionals in accounting firms. Its Corporates segment sells a full suite of content-driven technology solutions for small businesses all the way to multinational organizations, including the seven global accounting firms.

Create your own income. Learn how in our Dividend Income for Life Guide!

What’s to like about Thomson-Reuters?

TRI’s generates 80% of its revenue from subscription-based services; this predictable revenue and cash flow is great, as long as the customers stick around. This brings us another strength of Thomson-Reuters: its sticky business model. It sells products and services for complex and regulated domains such as law and accounting.

Through its WestLaw business unit, TRI offers an important service to lawyers. Law firms don’t have the time to jump from one provider to another. With WestLaw and Checkpoint, the tax & accounting software, Thomson-Reuters offers top-of-the-line software to two stable industries. Implementing and learning these services required a high degree if involvement from both TRI and the customers, which tends to cement the relationship between them.

This large customer base to offer cross-selling opportunities. Corporate clients have legal and accounting departments, law firms have accounting departments, etc.

The company generates steady organic growth throughout all segments. The pivot towards cloud-based software should allow it to lower acquisition costs while keeping its existing customer base. The complexity of its fields of business provides a strong barrier to entry against competitors. TRI is well-diversified geographically and enjoys a strong brand name.

Thomson-Reuters revenue, earning per share, and dividend payments evolution from 2014 to 2024 — TRI.TO revenue, earnings per share (EPS), and dividend payments for the last 10 years

The company is heavily investing in innovation, particularly in generative AI, to capitalize on the rising complexity of regulatory compliance and the demand for AI-driven solutions. It made notable progress with products like Westlaw Precision and CoCounsel, and the integration of Pagero to enhance corporate tax and audit capabilities.

Last quarter, Thomson Reuters reported solid results with revenue up 8.5% and EPS up 36%. Total organic revenue growth was 9%, with the “Big 3” segments growing by 10%, driven by strong transactional revenue and seasonal offerings. By segment, growth was as follows: Legal +7%, Corporate +12%, and Tax & Accounting +14%.

Potential Risks for TRI.TO

Selling its Financial and Risk (FR) segment brought in a good amount of cash, but reduced TRI’s business diversification. Following the transaction, TRI’s legal services now represent close to half of their revenues. While this segment is quite stable, it does not show rapid growth. A new technology emerging disrupting TRI’s financial legal services isn’t impossible either. TRI is an important shareholder of the London Stock Exchange (LSE) with a 15% stake. This participation is subject to market fluctuations and highly cyclical volumes.

While TRI counts on its Big 3 segments, the rest of its businesses (news and print) could adversely affect margins and slow overall growth. Finally, we saw TRI’S margin being affected by higher inflation in recent quarters. Multiyear contracts take time to reflect price increases.

TRI.TO Dividend Growth Perspective

Thomson Reuters has increased its dividend every year since 1993, but its dividend growth rate is not very impressive.

Selling Refinitiv in 2019 brought in a healthy infusion of cash into the business. Management bought back shares and authorized another 5M in share buybacks. An investor can expect a low single-digit dividend growth rate from now on, perhaps with nice surprises along the way as we were in 2022 with the 10% dividend increase, followed by another one in 2023. TRI did not disappoint in 2024 with another 10% increase.

Thomson-Reuters pays its dividend in USD.

Create your own income. Download our Dividend Income for Life Guide!

Final Thoughts on Thomson-Reuters

At 1.25% dividend yield, Thomson-Reuters is a low yield stock. It is also high growth. Total returns over 5 years were 200%! TRI has a stable business model that generates consistent cash flow. With its yearly dividend increased, TRI management is showing its confidence for the future.

Management increased the dividend by 10% in early 2024 and expects to buy back for $1B worth of share. Full-year 2024 outlook expects organic revenue growth of approximately 6%.

TRI.TO stock is trading at a high valuation. It’s trading at a lower P/E ratio than its five-year average, but a P/E ratio of 33 and a Fwd P/E ratio of 44 might give you reason to pause. With market expectations high, will Thomson-Reuter be able to innovate to keep high-single digit revenue growth going? It’s certainly worth a look.

Foundational Stocks: TFI International (TFII.TO)

A foundational stock, or core holding, is one you can buy and forget about for 10 years without worry. TFI International (TFII.TO) is such a stock. A sleep-well-at-night investment you know will be around 10 years from now and give you growth. Find out more about TFII.

Build on foundational stocks to create income for life! Learn more in our Dividend Income for Life Guide!

TFI International Business Model

TFI International is one of the largest trucking companies in North America. Its segments include Package and Courier, Less-Than-Truckload, Less-Than-Truckload, and Logistics.

Package and Courier picks up, transports, and delivers items across North America. Less-Than-Truckload picks up small loads, consolidates, transports, and delivers them. The Truckload segment offers conventional and specialized truckload services, including flatbed trucks, tanks, dumps, and oversized. It offers specialized trailers and a million-plus square feet of industrial warehousing space. Logistics provides asset-light logistical services, including brokerage, freight forwarding, transportation management, and small package parcel delivery. TFII hauls compostable and recyclable materials and offers residential waste management services.

With its size and vast network, it enjoys economies of scale, giving it an edge over the competition. While it competes with lower-cost rail transportation, the flexibility of truck transport means there will always be demand.

Another benefit of TFII’s size is that it can buy smaller competitors to fuel its growth. It has completed over 80 acquisitions since 2008.

TFII.TO Investment Thesis

Since TFI International is expanding, it might be time to invest and ride with them for a while. It made a wise move to expand outside Canada since the U.S. and Mexican economies have great potential.

With a larger fleet, TFI will be ready to pick up any available steady growth. Investing in a leader in Canada and North America is a safe bet for any investor looking to build a dividend growth portfolio. The company displays an appetite for further growth by acquisition that bodes well for the years to come. TFI completed the major acquisition of UPS Freight in April 2021 and it’s already a transformational success. The company is expanding its margins as it benefits from additional economies of scale and the network effect.

Below is TFII’s stock price evolution over 10 years, as well as its revenue, EPS, and dividend growth. Note that what looks like a dividend cut in the dividend triangle graph in April 2021 was really a conversion to USD when TFII started paying its dividend in US currency.

TFII could see some headwinds for a bit as many economists expect a recession. However, this also means TFII should remain in a solid position to make more acquisitions as smaller competitors may struggle in this economy.

Potential Risks for TFII

While road transportation beats railroads in flexibility, railroads win on cost. The transportation industry is highly cyclical; stock values could suffer in downturns. Oil prices affect the trucking industry; there is a limit in fuel surcharges companies can add to their bill.

Big fish eating little fish. — TFII will need to gobble up more smaller companies

TFII will have to identify other potential mergers and acquisitions transactions to ensure continued earnings growth. The organic trucking business stay cyclical in the future. The next time we hit a recession, the stock price could drop rapidly. Remember that TFII is a volatile stock. On one earnings day, the stock price fell 8% on weaker-than-expected results. Finally, if there is a tariff war in North America, TFII will be stuck in the middle.

TFII Dividend Growth Perspective

TFII has had consecutive dividend increases since 2016. While it has a 5-year dividend growth rate over 13% (CAGR), the payout ratios remain low. This leaves much room for increases in its dividend payout. We would have liked to see a smoother trend for earnings, but the dividend payouts aren’t at risk for now. In 2023, TFII rewarded shareholders with a dividend increase of 14%, and another one of 12.5% in 2024!

Get more information about creating sustainable dividend income in our Dividend Income for Life Guide.

In Closing

TFI International (TFII.TO) is a great foundational stock for any portfolio. You can be confident that, though volatile, a position in this stock will grow over time. Of course, when we say you can “forget” about a foundational stock for 10 years, we’re exaggerating. It’s still best practice to monitor all your holdings quarterly, including TFII. With foundational stocks, however, I don’t spend much time or dig too deep into the quarterly results unless I see signs of trouble, which I rarely do.