Traders wanting on the Canadian inventory market have loads of the extra generally understood dividend shares to select from. Whether or not that’s in sectors akin to power, financials, or REITs, they’re the form of plain vanilla choices offering buyers with the sorts of yields they count on. I’ve written aplenty about such shares.

Nonetheless, on this piece, I believed I’d spotlight Alimentation Couche-Tard (TSX:ATD) as a sneaky dividend inventory price contemplating. The corporate is probably not identified for its dividend. However that’s one vital attribute of its total mannequin I believe can get missed.

Right here’s why Couche-Tard seems like a stable decide from my perspective for these searching for sturdy whole returns over time.

A 1% dividend yield? That’s it?

Sure, Couche-Tard pays a dividend. The expansion-by-acquisition comfort retailer operator is generally identified for its large-scale acquisitions, together with a failed bid to purchase 7-11 and one other huge French retail chain.

In recent times, acquisitions have slowed, although the corporate is repeatedly increasing its footprint. From a progress perspective, I nonetheless assume there’s so much to this firm’s thesis. That’s not prone to change.

However as Couche-Tard matures and its margins stay sturdy (or increase) over time, I additionally assume there’s the likelihood this firm may shift to turning into extra of a dividend-oriented inventory.

And it’s price noting that one of many key the explanation why the corporate’s dividend is so low is the inventory’s efficiency lately. Wanting on the chart proven on the prime of the article, Couche-Tard has been a winner. I’d take that low yield in alternate for that type of efficiency any day of the week.

Can Couche-Tard actually develop its dividend?

For my part, the true issue behind whether or not or not the corporate’s administration workforce will in the end resolve whether or not shifting to a dividend-first technique is smart is the relative high quality of the potential offers on the market available in the market. Proper now, the market seems to be tightening considerably, and acquisition and financing prices are excessive.

If Couche-Tard can’t discover sufficient compelling offers to place its extra stability sheet capability to work on that entrance, distributing extra funds to shareholders may drive additional funding over time. It’s a technique that has performed out amongst different main mature gamers on this house. I don’t see why Couche-Tard can be any totally different.

At a 1.1% present dividend yield, this isn’t a inventory I’d put in a passive revenue portfolio. I’d need to personal it for the whole return potential Couche-Tard has proven over the long run. I’m simply saying the corporate’s dividend shouldn’t be ignored proper now.