Discovering a dividend inventory with a historical past of mountaineering its payout is without doubt one of the smartest methods to construct lasting wealth. It indicators a dividend inventory is constantly rising earnings, managing debt responsibly, and rewarding shareholders yr after yr. Common dividend will increase not solely shield your revenue from inflation but additionally increase your yield on value over time. Subsequently, the longer you maintain, the extra your unique funding pays you again. And above all of them, this dividend inventory is perhaps a stellar possibility.

HPS

Hammond Energy Options (TSX:HPS.A) is a type of uncommon industrial shares that mixes development, revenue, and resilience. Proper now, it appears like one of many strongest dividend alternatives on the TSX. Whereas many buyers have targeted on massive names in power or finance, Hammond has quietly turn into one in every of Canada’s top-performing producers, constantly rising each its earnings and its dividend.

Hammond Energy builds customized electrical transformers and energy methods used throughout industries from manufacturing and information centres to renewable power and electrical automobiles (EV). These aren’t short-term merchandise, however mission-critical elements within the electrical grid and industrial infrastructure. That makes Hammond’s enterprise each regular and important. As electrification accelerates worldwide, demand for transformers and power administration gear has surged, and Hammond has been capturing that development effectively.

Numbers don’t lie

Financially, Hammond’s latest efficiency has been distinctive. In its third quarter of 2025, the dividend inventory reported income of $218 million, the second-highest quarter for shipments ever. Internet revenue hit $17.4 million, with its backlog now 27.7% increased than the start of the yr. Gross margins remained robust at over 30%, with information centre exercise accelerating within the quarter, making up for 53% of its backlog. This operational power has allowed Hammond to pay down debt, strengthen its steadiness sheet, and reinvest in enlargement — all whereas persevering with to extend shareholder returns by means of dividend hikes.

And people dividends have been rising quick. Hammond has now elevated its quarterly dividend a number of occasions over the previous two years, most lately to $1.10 per share yearly, representing a yield of round 0.62%. Which may appear modest at first look, however what makes it highly effective is the tempo of development. The corporate’s dividend has practically tripled in simply three years, and with a payout ratio nonetheless at simply 16% of earnings, there’s loads of room for extra hikes forward. This mix of robust earnings development and a conservative payout provides Hammond one of many healthiest dividend profiles on the TSX.

Extra to return

The dividend inventory’s outlook is equally robust. Hammond continues to profit from international electrification, renewable infrastructure, and synthetic intelligence (AI)-driven information centre development. All of those require large-scale, dependable transformers and energy distribution methods. It’s increasing manufacturing capability in each Canada and the U.S. to satisfy rising demand, and it’s doing so with out overextending financially. This disciplined development technique units Hammond aside from extra risky industrial friends. It grows inside its means, making certain that dividends stay sustainable even when the financial cycle slows.

From a valuation standpoint, Hammond nonetheless appears attractively priced regardless of its spectacular rally over the previous two years. The inventory trades at roughly 22 occasions ahead earnings, a reduction to international industrial friends, at the same time as profitability and return on fairness proceed to rise. For buyers preferring to purchase high quality firms earlier than they turn into family names, Hammond presents a uncommon mixture of development, revenue, and undervaluation.

Backside line

In brief, Hammond is a dividend inventory value grabbing proper now as a result of it’s doing all the things proper. The dividend inventory is rising earnings, rising dividends, and capitalizing on long-term structural demand. Its administration has proven outstanding consistency, its steadiness sheet is pristine, and its finish markets are booming. The truth is, right here’s what a $7,000 funding might usher in at this time from dividends alone.

Altogether, it is a inventory that doesn’t simply pay you, it provides you a elevate yearly, all whereas benefiting from the worldwide transition to cleaner, smarter energy methods. For buyers trying to construct a dependable, rising revenue from an neglected Canadian industrial, Hammond Energy is strictly the form of gem that deserves a spot in a long-term portfolio.