Canadian Stocks Analysis

Engineering Growth in a Changing World

Infrastructure, sustainability, and urban development are long-term investment themes that require specialized expertise. One Canadian company has positioned itself at the center of these trends, delivering engineering, architecture, and consulting services that help governments and corporations adapt to climate change, modernize infrastructure, and manage resources responsibly. With a diversified portfolio and strong project backlog, this business is well-placed to capture steady growth in the coming years.

Building the Foundations of Tomorrow

Stantec (STN.TO) is a global engineering and design firm that provides sustainable solutions across multiple industries. Its business model spans five major operating units: Infrastructure, Water, Buildings, Environmental Services, and Energy & Resources. This diversified structure enables Stantec to balance revenue between government contracts, private sector projects, and recurring environmental consulting.

The company operates in three geographic segments—Canada, the U.S., and Global markets. Its top 25 clients are highly engaged, with more than half using services from at least four of its business units. This multi-service approach creates strong client retention and cross-selling opportunities. Stantec covers the full project life cycle: from concept and planning to design, construction management, and even remediation and decommissioning.

Stantec (STN.TO) Diversified Geographic Footprint form their 2024 Annual Report. — Stantec (STN.TO) Diversified Geographic Footprint from its 2024 Annual Report.

The Bull Case: Riding the Infrastructure Wave

Stantec is in an enviable position as one of the world’s leading engineering and consulting firms, with exposure to some of the strongest long-term demand drivers in the industry.

Playbook
The company focuses on government infrastructure contracts and private sector capital projects. Its business mix reduces volatility compared to firms that rely heavily on cyclical sectors like mining or oil and gas. With a $7.9B backlog—equivalent to roughly 13 months of work—Stantec enjoys strong revenue visibility.

Growth Vectors

Government Infrastructure Spending: In both the U.S. and Canada, government programs are allocating billions toward modernizing transportation, energy grids, and water systems.
Water Segment Strength: Backlog in Water grew 24% YoY, reflecting rising demand for clean water and wastewater management solutions.
Strategic Acquisitions: Stantec continues to use M&A to broaden expertise and geographic reach. With an under-leveraged balance sheet, it has flexibility for future deals.
Energy Transition Projects: Increasing demand for renewable energy and carbon reduction strategies has created new growth avenues.
Geographic Diversification: With about half its revenue from the U.S., one-quarter from Canada, and the rest international, Stantec is not overly reliant on any single region.

Economic Moat
Stantec’s moat lies in its diversified expertise, strong client retention, and international presence. Its ability to provide integrated solutions across sectors makes it a trusted long-term partner. While margins are pressured by competition, its backlog and breadth of services offer resilience compared to smaller peers.

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The Bear Case: Cycles, Talent, and Competition

Despite its strengths, Stantec faces risks tied to its cyclical industry, dependence on skilled labor, and a competitive marketplace.

Business Vulnerabilities
Stantec relies on government budgets and private sector investments. In an economic downturn, project approvals could be delayed, reducing growth. Its historical performance between 2017 and 2022 was uneven, reflecting how cycles affect consulting firms.

Industry & Market Threats

Talent Shortages: Engineering and environmental consulting are labor-intensive. Wage inflation and retention challenges could erode margins.
Acquisition Risks: While acquisitions are a growth driver, overpaying or poor integration could dilute shareholder value.
Cyclical Nature: Stantec’s revenue growth is closely tied to macroeconomic trends in infrastructure and construction.

Competitive Landscape
Stantec competes with global heavyweights such as WSP Global and Tetra Tech, along with numerous regional firms. WSP, with roughly double the market cap and revenue, benefits from greater scale and financial flexibility. This puts pressure on Stantec to remain competitive on both pricing and acquisitions.

What’s New: Strong Quarter Highlights Water

On August 19, 2025, Stantec delivered a solid quarter:

Revenue up 7% YoY, including 4.8% organic growth.
EPS up 21%, supported by higher project margins and lower administrative expenses.
Regional Growth: U.S. +5.7%, Canada +6.2%, Global +10.5%.
Water Segment Strength: Continued double-digit organic growth, confirming robust demand.

The results reinforce management’s optimism, as Stantec raised its 2025 and 2026 earnings estimates.

The Dividend Triangle in Action: Steady Climb

Stantec (STN.TO) 5-year Dividend Triangle chart.

Looking at the Dividend Triangle:

Revenue has grown steadily, reaching $7.8B.
EPS has accelerated, now at $3.83.
Dividend growth, while modest, has been consistent, with the payout now at $0.225 per share.

Stantec’s dividend yield remains on the low side, but its strength lies in sustained growth potential and strong earnings momentum to support future increases.

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Final Thoughts: A Reliable Builder in Any Market

Stantec’s diversified service portfolio, strong backlog, and alignment with secular trends like climate adaptation, clean water, and infrastructure modernization make it a compelling pick in the engineering and consulting space. While competition and talent risks are worth monitoring, its growth trajectory appears well supported. For long-term investors, Stantec represents a steady growth-and-income story in a critical industry.

A Stable Powerhouse in Ontario’s Energy Landscape

For income investors, regulated utilities offer something rare in the market: steady cash flow, predictable growth, and limited competitive threats. This company fits squarely in this category, with an entrenched position in Ontario’s electricity transmission and distribution network. While it’s not immune to political interference, its unique role in the province’s infrastructure makes it a compelling option for long-term dividend growth.

Keeping Ontario Connected: Hydro One’s Business Model

Hydro One (H.TO) operates almost entirely in Ontario, delivering electricity to roughly 1.5 million customers. Its business is split into:

Transmission (≈60% of revenue) – High-voltage power delivery across the province, including connections to local utilities and large industrial users.
Distribution (≈40% of revenue) – Supplying electricity to end users and municipal distributors.
Other Activities – Includes the Ivy Charging Network for EV fast charging and a small telecom segment.

This regulated structure means Hydro One earns a fixed, regulator-approved return on its assets, creating highly predictable revenue.

Hydro One (H.TO) Business Highlights from their 2024 Investor Overview Presentation.

The Bull Case: Building for the Future

A Monopoly with Predictable Cash Flow

Hydro One is the sole large-scale electricity transmission and distribution provider in Ontario. This monopoly structure means that, regardless of economic fluctuations, the company benefits from an entrenched customer base that cannot easily switch providers. Its revenue streams are supported by regulator-approved rates, which reduce earnings volatility and provide visibility into future cash flows—an attractive trait for dividend investors.

Multi-Year Capital Investment Program

One of Hydro One’s biggest growth levers is its robust capital investment plan, committing $1.3–$1.6 billion annually through 2027. These investments focus on modernizing Ontario’s grid, expanding transmission capacity, and integrating renewable energy sources. The recently completed Chatham-to-Lakeshore transmission project is a prime example of how these projects feed into earnings growth and strengthen the company’s infrastructure advantage. Beyond 2027, Hydro One is already mapping out additional projects that could extend this growth runway well into the next decade.

Benefiting from Electrification and Renewable Integration

As Ontario moves toward greater electrification—driven by electric vehicle adoption, heat pump installations, and renewable power integration—Hydro One’s infrastructure will be at the center of this transition. This shift is expected to increase electricity demand significantly, requiring both expansion of capacity and upgrades to handle more complex grid operations. The company’s expertise and entrenched position make it a natural partner for government initiatives aimed at decarbonization.

A Strong Provincial Economy as a Backdrop

Ontario’s economy is both the largest and one of the most diversified in Canada. From advanced manufacturing to technology and services, the province’s economic resilience supports steady electricity demand. This, in turn, gives Hydro One a solid foundation for planning long-term capital deployment without fearing sudden drops in usage patterns.

Clear Earnings Growth Path

Management projects EPS growth of 6–8% annually from 2023 to 2027, with a normalized 2022 EPS of CAD 1.61 as the baseline. This growth is expected to be supported by approved capital projects, organic demand growth, and potential acquisitions of municipal utilities. Combined with disciplined cost management, this sets the stage for steady dividend increases in the mid-single digits.

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The Bear Case: Political and Regulatory Headwinds

Political Influence and Governance Risk

The Ontario government owns 47% of Hydro One, which gives it significant influence over corporate governance. This has already manifested in the past when political leaders intervened to force leadership changes, disrupting corporate continuity. For long-term investors, this adds an unpredictable layer of risk—decisions may be made for political rather than financial reasons.

Regulatory Constraints on Profitability

H.TO operates in one of the more restrictive regulatory environments in North America. The Ontario Energy Board (OEB) sets allowable returns on equity, which are generally lower than what many U.S. utilities can achieve. This limits Hydro One’s ability to boost profitability even when operational performance is strong. It also reduces flexibility in responding to inflationary pressures or unexpected cost increases.

Interest Rate Sensitivity and Debt Load

Like most utilities, Hydro One carries significant debt to fund its capital projects. While this is standard for the industry, the company is vulnerable to rising interest rates, which increase borrowing costs and can erode profitability. Higher financing costs could also reduce the capital available for new projects, slowing the pace of growth. With long-term debt a constant feature of its balance sheet, even a modest rate shift can impact future earnings projections.

Geographic Concentration and Lack of Diversification

All of Hydro One’s core operations are within Ontario. While the provincial economy is stable, this geographic concentration means that any significant economic downturn, policy shift, or regulatory change in Ontario could have an outsized impact on the business. Unlike diversified peers such as Fortis or Emera, Hydro One does not have operations in other provinces or countries to offset regional risks.

Comparing with Peers

When placed alongside Canadian peers like Fortis (FTS.TO) and Emera (EMA.TO), Hydro One’s lower allowed return on equity and higher degree of political oversight become clear disadvantages. While Fortis and Emera operate in multiple jurisdictions—often with more favorable regulatory frameworks—Hydro One remains locked into a single, more restrictive environment. This reality caps its long-term return potential relative to more geographically diverse utilities.

What’s New: Solid Growth and a Dividend Boost

Hydro One’s most recent quarter (Q1 2025) underscored its steady trajectory:

Revenue: +11% YoY, driven by higher demand and regulator-approved rate increases.
EPS: +22% YoY.
Dividend: +6% increase announced.
Transmission revenue rose 15%, fueled by demand growth and rate changes.
Distribution revenue climbed 6.3% thanks to stronger consumption and 2025 rate adjustments.
Chatham-to-Lakeshore project energized in Dec 2024, contributing to results.
Guidance reaffirmed: 6–8% annual EPS growth through 2027.

The Dividend Triangle in Action: Hydro One’s Steady Climb

Hydro One (H.TO) 5-year Dividend Triangle chart.

Hydro One’s dividend triangle reflects its reliability:

Revenue Growth – Gradual, supported by capital projects and rate increases.
EPS Growth – Stronger growth from efficiency gains, regulated returns, and infrastructure expansion.
Dividend Growth – Modest but consistent, typically in the mid-single digits, in line with earnings growth.

While not a high-yield play, Hydro One offers predictable dividend growth—ideal for compounding income over the long term.

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Final Take: A Reliable, Regulated Income Play

Hydro One isn’t the most exciting stock on the market, but for investors seeking stability, modest growth, and reliable dividends, it’s a solid fit. Political risk and regulatory limits mean returns will never be explosive, but the predictability of cash flows and the essential nature of its services make it a dependable long-term holding.

Global Flavors, Local Impact: A Recipe for Dividend Growth

Fast food is no longer just about convenience—it’s about brand power, menu innovation, and the ability to adapt to changing consumer tastes across diverse geographies. The company we’re looking at today commands some of the most recognized quick-service brands in the world, each with its own loyal following. With a franchise-heavy model, it thrives on scale, efficiency, and international growth opportunities, while still contending with industry-wide pressures like labor costs and price-sensitive consumers.

Behind the Counter: How the Business Works

Restaurant Brands International (QSR.TO) operates a portfolio of well-known quick-service restaurant chains: Tim Hortons (coffee and baked goods), Burger King (flame-grilled hamburgers), Popeyes Louisiana Kitchen (fried chicken and seafood), and Firehouse Subs (hot subs). It runs through a predominantly franchise-based model, generating revenue from royalties, lease income, and sales at company-owned locations.

Tim Hortons remains the market leader in Canada, offering beverages, baked goods, and all-day food menus.
Burger King drives scale globally, with operations in over 100 countries, though it faces challenges in North America.
Popeyes delivers strong unit-level economics with its Louisiana-style menu and growing global presence.
Firehouse Subs is expanding in the U.S. and selectively internationally, targeting the premium sandwich market.

The franchise-heavy approach limits capital expenditures while providing steady cash flow, but it also means that brand execution relies heavily on franchisee performance.

Restaurant Brands Iconic Brands Stats from their International Segment Presentation.

Opportunity on the Menu: The Bull Case

Restaurant Brands International ranks as the third-largest quick-service restaurant operator in the world, a scale that gives it bargaining power, brand leverage, and global expansion capacity.

Strengths driving the bull case:

Global Scale & Brand Recognition – The company operates across more than 120 countries, with iconic brands recognized for decades.
Franchise Model Efficiency – With over 100% of net new openings driven by franchisees, capital intensity stays low, allowing the company to reinvest in marketing and menu development.
Growth Through Expansion & M&A – Management is targeting 40,000 restaurants by 2029, with both organic openings and acquisitions (e.g., Carrols Restaurant Group, Popeyes China) feeding the pipeline.
Turnaround Potential at Burger King – The “Reclaim the Flame” strategy is refreshing stores, improving operations, and boosting franchisee profitability.
Menu Innovation & Digital Expansion – Tim Hortons’ new product launches and loyalty programs, plus Popeyes’ global chicken sandwich success, demonstrate the ability to capture new demand.

While Tim Hortons has reasserted its leadership in Canada, the most dynamic growth story is in international markets, where Burger King and Popeyes are achieving high-single-digit unit growth annually. This geographic diversification helps smooth performance when one brand or region faces headwinds.

Risks to Chew On: The Bear Case

Even with its scale and iconic brands, Restaurant Brands International faces meaningful risks that could hinder its expansion and earnings trajectory.

Key vulnerabilities and threats:

Franchisee Profitability Pressures – Rising wages, food inflation, and operational costs can squeeze franchisee margins, leading to slower store expansion or reduced reinvestment.
Debt Load Limits Flexibility – With a net debt-to-EBITDA ratio of 4.6x at the end of 2024, high leverage could restrict strategic acquisitions or marketing investments if interest rates rise further.
Mixed Brand Performance – While Tim Hortons and Popeyes post healthy sales growth, Burger King North America continues to lag peers like McDonald’s and Wendy’s in traffic.
Global Economic Sensitivity – As a discretionary spending category, quick-service dining is vulnerable to economic slowdowns, which can trigger more discounting and hurt margins.
Competitive Heat – McDonald’s and Yum Brands have global dominance, scale advantages, and deep digital ecosystems, forcing QSR to maintain constant innovation to keep market share.

The heavy reliance on franchisees means brand quality is only as strong as local execution—something that’s difficult to maintain perfectly across thousands of locations and dozens of countries.

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What’s New: Recent Performance Highlights

In its 2025 Q2 results (May 29, 2025), Restaurant Brands International reported:

Revenue up 21%, driven largely by acquisitions (Carrols Restaurant Group and Popeyes China).
EPS up only 3%, as higher costs and integration expenses weighed on profitability.
System-wide sales grew 2.8%, with international markets delivering 8.6% growth.
Comparable sales flat at 0.1% globally, or just over 1% adjusted for Leap Day.
Burger King North America saw a 1.3% decline in comparable sales, reflecting softer consumer demand.
Tim Hortons and Popeyes posted positive comps, benefiting from menu innovation and marketing.

The Dividend Triangle in Action: QSR’s Growth Profile

Restaurant Brands (QSR.TO) 5-year Dividend Triangle chart.

Looking at the Dividend Triangle—revenue, EPS, and dividend growth—Restaurant Brands International shows a consistent uptrend in the top line and dividends, but EPS volatility is a watch point.

Revenue has risen steadily to $12.19B over the past three years, fueled by expansion and acquisitions.
EPS has grown over time but faced a dip in 2025 due to cost pressures and integration expenses.
Dividend has increased consistently, now at $0.852 per quarter, showing management’s commitment to rewarding shareholders.

The dividend growth case here leans on long-term expansion and scale efficiencies rather than near-term earnings acceleration.

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Final Bite: A Brand Empire Built for the Long Term

Restaurant Brands International combines brand power, a scalable franchise model, and aggressive global expansion ambitions. While short-term headwinds—particularly in Burger King North America and from higher operating costs—are real, its multi-brand, multi-market portfolio offers resilience and multiple growth levers. For dividend growth investors, the appeal lies in a management team committed to steady dividend hikes, backed by a cash-generating model that doesn’t require heavy capital investment.

Printing Results, Not Just Labels

This Canadian company is a global heavyweight when it comes to labels, packaging, and tracking tech. From shampoo bottles to RFID tags, it has its fingerprints on thousands of everyday products — and it keeps showing up with results.

It just posted a strong quarter (revenue and EPS up 9%) and remains off most investors’ radars. But behind the scenes, this business has been compounding steadily with a blend of smart acquisitions, global diversification, and consistent dividend growth.

Let’s peel back the label and take a proper look at what’s underneath.

Business Model: Labeling the World

CCL Industries is a global leader in specialty label and packaging solutions with operations in 42 countries. It operates across four key segments:

CCL (labels and containers for consumer and healthcare goods)
Avery (printable media and office products)
Checkpoint (RF/RFID tech for retail security and tracking)
Innovia (specialty multilayer films and polymer banknotes)

The company earns revenue from long-term contracts, recurring customer orders, and broad exposure to industries like consumer staples, pharma, logistics, and retail.

Their combination of essential products and global reach makes the business resilient, even when headlines scream recession.

CCL Industries (CCL.B.TO) Highlights from Its 2024 Annual Report.

Investment Thesis: Diversified and Disciplined

CCL Industries doesn’t depend on a single market, product, or trend. That’s part of the appeal. It combines consistent organic growth with smart, bolt-on acquisitions. The company’s 2013 acquisition of Avery, followed by Innovia and Checkpoint, helped reshape its business into a multi-pronged revenue machine.

Even in a cost-sensitive world, labeling and packaging remain critical — and CCL keeps adding value through higher-margin segments like RFID, polymer banknotes, and specialty films.

It’s also one of those rare businesses in the material sector that behaves more like a compounder: efficient operations, strong ROE, and a steady dividend growth history.

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Bull Case: Labeling Growth Across the Globe

CCL is a well-managed, acquisition-savvy company with a habit of integrating well and producing solid results. The latest quarter showed strong momentum in core segments, especially:

Organic growth of 3.8%
Strong demand in home & personal care
Growth in Europe, Mexico, and the Americas
Positive currency impact and margin stability

The company also announced a share buyback of 8.82% of issued capital, which is a strong vote of confidence from management.

Its global scale, product diversification, and recurring cash flow make it a stable performer in volatile markets.

Bear Case: Margin Pressures & Acquisition Risks

Of course, nothing is perfect.

CCL is still part of the materials sector, which means it’s exposed to raw material price swings. As inflation and logistics costs rise, so do the risks to margins — and there’s only so much pricing power before customers push back.

It also relies heavily on acquisitions for growth. While past deals have been smart, no streak lasts forever. And restructuring costs in Checkpoint ($0.8M) serve as a reminder that not every unit is a smooth operator.

The Dividend Triangle in Action

CCL Industries (CCL.B.TO) 5-Year Dividend Triangle.

Let’s see how CCL performs on our three-part Dividend Triangle:

Revenue: Consistent upward trend, now at $7.4B
EPS: Solid long-term growth, with a strong Q1 rebound
Dividend: Slowly and steadily increasing — with a low payout ratio

While the yield remains modest (~0.4%), it’s growing, and CCL has plenty of room to accelerate it down the line.

Latest Results Recap

On May 26, 2025, CCL Industries reported:

Revenue up 9%
EPS up 9%
Strong organic growth in Home & Personal Care
Innovia performed well; Checkpoint faced $0.8M in severance-related costs
Announced share buyback for up to 8.82% of capital

It was a very solid quarter overall — no surprises, just execution.

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The dividend triangle is an exclusive concept developed at Dividend Stocks Rock (DSR).

While many seasoned investors use these metrics in their analysis, no one has created a list based on them before.

Don’t waste any more time with complex strategies and dozens of metrics duplicating each other: focus on quality and download the list with filters now.

Final Word: Built to Scale and Last

This stock does grab results. Over the years, it’s turned packaging and labeling into a high-margin, global business, driven by innovation, disciplined acquisitions, and rock-solid execution.

It may not offer a sky-high yield, but it delivers where it counts: steady growth, strong cash flow, and the kind of business that keeps performing across market cycles.

If you’re looking to anchor your dividend portfolio with quality names that can weather economic cycles, CCL.B.TO is one to watch.

How Have I Never Posted This Before?

How is it possible that I keep talking about this store… but never shared a full, public analysis of it?

If you’ve followed me for a while, you already know I’m a big fan of this one. Some companies make headlines. Others make results. Couche-Tard (ATD.TO) does both. Whether it’s Circle K on a road trip or a late-night Couche-Tard pit stop, this company is everywhere — and still expanding.

Between fuel, snacks, coffee, and now EV charging, this business is evolving fast. It’s not a high-yielder, but it’s consistent, resilient, and cash flow rich. So yes — it’s about time we break it down properly.

Business Model: Fuel, Coffee, and Convenience at Global Scale

ATD is one of the largest convenience store operators in the world. With more than 17,000 stores across 29 countries, it operates primarily under the Couche-Tard and Circle K banners. Roughly 13,000 of those stores also sell road transportation fuel.

The company generates revenue from:

Fuel sales (still the most significant slice)
In-store merchandise (snacks, drinks, convenience goods)
Food service (prepared foods, coffee, fresh grab-and-go)
Service offerings like car washes, ATM fees, and mobile payment partnerships

Its North American operations are structured into 17 business units and it has deep market penetration in Canada, the U.S., and Northern Europe. The company is currently focused on strengthening its margins and customer experience through its 10 for the Win strategic plan, aiming to exceed $10 billion in EBITDA by 2028.

Alimentation Couche-Tard (ATD.TO) Global Retailer Highlights from its Q4-FY2025 Investor Presentation.

Investment Thesis: The Steady Compounder that Never Stops Moving

Couche-Tard is one of those businesses that feels boring… until you look at the numbers.

The company has built a long-term track record of revenue, EPS, and dividend growth through steady execution and smart acquisitions. It’s rare to find a company that consistently integrates new stores and finds ways to unlock margin — but ATD has done it for years.

While the market worries about declining fuel consumption and cigarette sales, Couche-Tard is already pivoting — expanding fresh food offerings, testing EV charging stations, and rolling out smart loyalty programs to drive in-store traffic.

Its scale advantage allows for pricing power, while its operational playbook enables new acquisitions to become accretive faster than most peers. The company generates serious free cash flow and operates with discipline — which is why it has quietly become one of the most efficient operators in retail.

It’s not immune to headwinds, but it adapts. And in a recession? This business gets even more interesting.

The Dividend Triangle in Action

Alimentation Couche-tard (ATD.TO) 5-Year Dividend Triangle.

Let’s put Couche-Tard through the Dividend Triangle:

Revenue Growth: Over $100B in trailing twelve-month revenue, up from ~$85B just a few years ago. The business continues to expand both organically and through acquisitions.
EPS Growth: Normalized EPS is hovering near all-time highs ($3.70 TTM), showing the business continues to scale and manage costs effectively — even as fuel margins fluctuate.
Dividend Growth: Still a very low yield (under 0.3%), but the company has increased its dividend annually with a solid CAGR. Payout ratio remains extremely low (~5%), leaving plenty of room for future hikes.

This is a classic low-yield, high-growth name and fits the long-term compounding strategy like a glove.

Bull Case: Built to Scale, and Still Growing

Couche-Tard has proven over the decades that it can scale, integrate, and execute across borders. Its dominance in the convenience store space is the result of:

Smart, disciplined M&A
Margin expansion through cost synergies
Adapting to consumer trends (e.g., food, loyalty, digital)

It has the balance sheet and operational know-how to weather changing trends (EVs, tobacco decline) and shift its model accordingly. And with its 10 for the Win plan in place, management has a clear roadmap to create shareholder value.

Bear Case: Fuel Reliance & Acquisition Risk

Despite its strengths, Couche-Tard isn’t without risks:

Fuel remains a key profit driver — any long-term demand drop will pressure margins
Cigarette sales, a high-margin category, are in secular decline
The company’s reliance on acquisitions means missteps (like the failed Carrefour deal) could be costly
Food service expansion brings Couche-Tard into competition with grocery chains and QSRs — not easy battlegrounds

In short, execution must remain tight. This isn’t the time for acquisition blunders or weak integration.

Latest Results: A Slower Quarter(s), but Strategy Intact

Q1 FY2026 Earnings (June 26, 2025)

Revenue: Down 7.5% (fuel price/demand weakness)
EPS: Down 4.2%
Merchandise Revenue: Up 2.4% (led by Canada & Europe)
Operating Expenses: Up, due to strategic investments
Fuel Gross Margin: Improved, softening the impact of the revenue drop
M&A Activity: No update on the potential 7-Eleven acquisition

While the numbers were soft, the long-term thesis remains. The company is investing to reposition its business — and short-term pain may unlock future gain.

Final Word: Simple. Strong. Still Compounding.

Couche‑Tard just posted a softer quarter: revenue fell 7.5%, EPS dipped 4%, and growth in fuel sales took a breather. But dig deeper, and you’ll see why it still matters.

Merchandise and service revenue is growing. They’re investing intentionally — stepping up fresh food, EV charging, and loyalty tools. The business is evolving, not collapsing.

Look, I’m not here for flash. I’m here for resiliency, adaptability, and cash flow. And despite a bump in the road, Couche‑Tard remains all three. That’s exactly why I’m comfortable rolling the cash into this full position: it’s a compounder, even when it’s slow.

Remember to review all of your holdings quarterly, though.

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Why I Keep Watching This Underdog Bank

It’s not flashy, it doesn’t have thousands of branches, and it definitely doesn’t get the media attention of Canada’s Big 6. But this bank has quietly built a niche in one of the most profitable corners of the financial sector — and it keeps delivering.

EQB Inc. (EQ Bank) blends digital efficiency with high-margin lending, and while the road isn’t always smooth, it continues to grow, raise its dividend, and find ways to outmaneuver bigger competitors. That’s exactly why I keep watching.

Business Model: Digital-First, Credit-Focused

EQB is a challenger bank that’s carved out its niche by focusing on alternative-A mortgage lending, commercial real estate loans, and a 100% digital banking platform. Through EQ Bank, it offers high-interest savings accounts, GICs, and personal lending products — all without branches.

On the commercial side, it’s expanded into equipment leasing, multi-unit residential financing, and business lending through strategic fintech and credit union partnerships. The result? A growing loan book, solid margins, and a nationwide customer base that now tops 560,000.

Unlike traditional banks, EQB lends to self-employed individuals, newcomers, and businesses that don’t always check all the Big Bank boxes. That adds risk — but also reward.

Equitable Bank Overview from the Covered Bond Invetsor Presentation. — Equitable Bank Overview from the Covered Bond Investor Presentation.

Investment Thesis: The Right Niche, The Right Time

EQB has done an impressive job turning its smaller size into an advantage. Its fully digital platform means lower costs, faster innovation, and no legacy branch network dragging it down. Instead, it focuses on tech-enabled growth: direct-to-consumer banking, alternative mortgage lending, and commercial finance.

What sets EQB apart is its ability to serve customers that others overlook — and do it profitably. Its net interest margins are among the highest in the industry, thanks to higher-yielding loans and a more agile model.

Yes, it’s not immune to credit cycles. But this is a stock that’s grown steadily over the past five years, raised its dividend regularly, and delivered a solid return for investors willing to go beyond the Big 6. That makes it a name worth watching — or holding.

The Dividend Triangle in Action: Growth with a Side of Volatility

Equitable Group (EQB.TO) 5-Year Dividend Triangle.

Let’s run EQB through the Dividend Triangle and see if it still checks the right boxes despite a bumpy quarter.

1. Revenue Growth: Revenue stands at $1.279B, nearly doubling over the past few years as EQB expanded its loan book and deposit base.

2. Earnings Growth: EPS currently sits at $10.03, though it’s dipped due to higher provisions for credit losses (PCLs). Long term, the trend remains positive despite short-term volatility.

3. Dividend Growth: The dividend now stands at $0.53, up again by 4% last quarter. That’s steady growth for a company reinvesting heavily while still rewarding shareholders.

Summary: EQB passes the Dividend Triangle test — even if earnings hit speed bumps, its top line and dividend trend continue to move in the right direction.

The ONLY List Using the Dividend Triangle

After this first example, you may wonder how I was able to differentiate these positions.

I analyze companies according to their dividend triangle (revenue, earnings, and dividend growth trends), combined with their business model and growth vectors. While this may seem too simple, two decades of investing have shown me it is reliable.

While many seasoned investors also use these metrics in their analysis, no one has created a list based on them before. This is exactly why I created The Dividend Rock Stars List.

The Rock Stars List isn’t just about yield—it’s built using a multi-step screening process to ensure the highest-quality dividend stocks. You can read more about it or enter your name and email below to get the instant download in your mailbox.

Bull Case: Undervalued and Underappreciated

EQB might not get the spotlight like the Big Banks, but its fundamentals are compelling:

Higher NIMs and lower costs thanks to its digital-first model
Niche mortgage lending to underserved segments = stronger yields
Commercial finance growth = new profit centers
Fintech partnerships & open banking readiness position EQB well for the future
Consistent dividend hikes + long-term loan growth

It’s lean, focused, and still has room to scale — especially outside the Big Bank footprint.

Bear Case: Credit Risk and Rate Sensitivity

Still, this isn’t a stock for the risk-averse:

Rising PCLs (up 36% last quarter) show pressure in equipment & commercial lending
EPS dropped 17%, reminding us that loan quality can shift quickly
Sensitive to interest rate changes and tighter regulations
Commercial loan exposure could drag returns if the economy slows
Not “too big to fail” — lacks the stability of Big 6 peers

It’s a bank that works well in calm markets — but needs careful monitoring when the environment gets rocky.

Latest News: Soft Quarter, but the Growth Continues

EQB’s most recent quarter was mixed:

Revenue flat | EPS -17%
Net interest income +1% | NIM 2.20%
EQ Bank customers +23% (to 560K)
Higher impaired loans + two commercial accounts added risk
Dividend increased 4% — again!

Even with some weakness, EQB’s management remains confident — and the long-term growth path is still intact.

Want to See My Full Breakdown?

If you want to hear more about why I’m keeping EQB on my radar — especially after a soft quarter — I’ve got you covered.

Watch the full EQ Bank analysis on YouTube:

In the video, I break down:

What’s driving EQB’s growth
What worries me about recent results
Where I see an opportunity going forward

Final Word: Lean, Digital, and Worth the Risk (for the Right Investor)

EQB isn’t for everyone. It doesn’t have the brand recognition or the scale of Canada’s Big 6. But that’s the point.

It’s leaner, faster, and focused on segments that others ignore — and it’s done a great job turning that into long-term growth. With a strong Dividend Triangle, regular dividend hikes, and a clear digital vision, EQB is the kind of stock that can reward patient investors willing to go off the beaten path.

Just be ready to hold on through the bumps.