Investing in high-quality shares that commerce at an affordable valuation is a confirmed technique for producing market-beating returns. On this article, I’ve recognized one such dividend-paying TSX inventory you should buy and maintain proper now with simply $500.

Valued at a market cap of $1.23 billion, Trican Effectively Service (TSX:TCW) is a TSX dividend inventory that has surged over 400% within the final 5 years. Regardless of its outsized returns, it additionally pays shareholders a tasty dividend yield of three.7%.

Trican Effectively Service gives tools, merchandise, and expertise for oil and fuel effectively operations throughout Canada. It provides cementing options for varied effectively varieties, hydraulic fracturing providers together with specialised fluids and components, coiled tubing providers for milling and manufacturing enhancement, and acidizing remedies to revive effectively efficiency.

Trican serves the drilling, completion, stimulation, and remodeling phases of oil and fuel growth whereas additionally promoting chemical merchandise to the business.

Is that this TSX inventory a great purchase proper now?

Trican Effectively Service delivered strong second-quarter outcomes that exceeded expectations. Within the June quarter, it reported income of $213.8 million, with adjusted EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortization) of $45 million, indicating a margin of 21%, up from 19% in the identical quarter final 12 months. The Canadian oilfield providers firm generated constructive earnings of $19.5 million or $0.11 per share and reported robust free money circulation of $24.4 million within the second quarter (Q2).

Regardless of going through some pricing stress attributable to traditionally low pure fuel costs, Trican maintained strong margins by way of value administration initiatives. The removing of carbon taxes and elevated inner trucking helped offset value will increase in areas like cement pricing. The corporate’s give attention to the Montney, Duvernay, and Deep Basin performs continues to drive efficiency throughout all three enterprise divisions.

Trican introduced plans to deploy a 100% pure gas-powered fracturing unfold by subsequent 12 months, totalling $40 million in capital funding for an eighth incremental unfold. This expertise development aligns with its technique to scale back buyer completion prices whereas bettering environmental efficiency.

Administration expressed optimism about near-term prospects as LNG Canada ramps as much as two billion cubic toes per day of exports, which ought to provide assist for pure fuel pricing. A number of clients have already begun discussions about subsequent 12 months’s tools availability and completion packages, offering robust visibility into the longer term.

Is the dividend inventory nonetheless undervalued?

Analysts monitoring the TSX inventory forecast adjusted earnings to develop from $0.54 per share in 2024 to $0.80 per share in 2027. On this interval, free money circulation is estimated to extend from $137 million to $178.5 million.

Given an annual dividend of $0.21 per share in 2025, Trican’s dividend expense is near $45 million, indicating a payout ratio of lower than 40%. Wall Avenue expects the TSX dividend inventory to lift its payout to $0.24 per share attributable to a widening money circulation base.

At the moment, Trican inventory trades at a ahead price-to-earnings a number of of 9.6 occasions, which is cheap. If it continues to commerce at the same a number of, Trican must be priced at $7.7 per share in early 2027, indicating an upside potential of 33% from present ranges. If we alter for dividends, cumulative returns might be nearer to 40% over the following 18 months.