A confirmed technique to generate market-beating returns persistently is to establish a portfolio of basically sturdy corporations that commerce under their intrinsic worth. One such high Canadian inventory that additionally pays shareholders a dividend is Waste Connections (TSX:WCN).
Valued at a market cap of virtually $45 billion, Waste Connections is among the many largest corporations in Canada. It supplies non-hazardous waste assortment, switch, disposal, and recycling companies throughout the US and Canada.
The corporate serves residential, industrial, municipal, and industrial clients whereas working landfills, switch stations, and intermodal services. It additionally makes a speciality of dealing with waste from oil and fuel exploration, together with drilling fluids, contaminated soils, and spill cleanups.
Within the final 10 years, Waste Connections has returned greater than 500% to shareholders. Regardless of these stellar returns, the TSX inventory is down 14% from its all-time highs, providing you with an opportunity to purchase the dip.
Is that this Canadian dividend inventory a great purchase?
Within the third quarter (Q3) of 2025, Waste Connections reported income of $2.458 billion, a rise of 5.1% 12 months over 12 months, which showcases the resilience of its stable waste enterprise.
Extra impressively, when stripping out commodity headwinds and the affect of closing Chiquita Canyon landfill, underlying stable waste margins expanded by roughly 80 foundation factors to 34.7%.
The quarter highlighted distinctive pricing execution with core stable waste worth progress of 6.3%, placing it on monitor for about 6.5% full-year pricing. The worth progress was reported regardless of a 2.7% decline in volumes, which had been tied to intentional shedding of low-margin contracts and sluggish building exercise.
Notably, roll-off exercise confirmed modest enchancment whereas landfill tons climbed almost 3% led by municipal stable waste and particular waste volumes.
Worker turnover dropped for the twelfth straight quarter, now down over 55% from peak ranges in late 2022 and early 2023. Security incident charges hit new firm data, falling greater than 25% via multiyear enhancements.
This human capital success is flowing on to the underside line, although administration notes that they nonetheless have a couple of third of the anticipated 100 foundation factors in margin enlargement but to be unlocked from these retention efforts.
Waste Connections continues to focus on acquisitions, having closed or signed offers totalling roughly $300 million in annualized income 12 months up to now, together with two of Florida’s largest personal waste corporations.
The corporate additionally purchased again roughly 2.4 million shares, almost 1% of shares excellent, making the most of what it seen as engaging market dislocations. The board authorized an 11.1% dividend enhance, marking the fifteenth consecutive 12 months of double-digit dividend progress since 2010.
What’s subsequent for the TSX dividend inventory?
Trying towards 2026, administration expects mid-single-digit income progress pushed primarily by pricing, with about 1% income carryover from this 12 months’s acquisitions.
The corporate anticipates above-average underlying stable waste margin enlargement. Nevertheless, this can be partially offset by commodity headwinds of 20 to 25 foundation factors and acquisition dilution of 10 to fifteen foundation factors, leading to total normalized margin enlargement.
Analysts forecast Waste Connections to increase adjusted earnings from $4.79 per share in 2024 to $8.24 per share in 2029. On this interval, its free money stream (FCF) is forecast to enhance from $1.22 billion to $2.18 billion.
A widening FCF base ought to translate to greater dividends. Bay Avenue estimates the annual dividend to extend from $1.17 per share in 2024 to $2.43 per share.
If the dividend inventory is priced at 31 occasions ahead FCF, which has similarities to the 10-year common, it ought to surge by greater than 50% over the following three years.
