Why Canadian Tire Is a Great Dividend Stock to Buy on the Dip

Canadian Tire Corporation Limited (TSX:CTC.A) has declined more than 16% over the past 12 months and the dividend stock could be a great buy for investors today.

At a price-to-earnings ratio of less than 14 and a price-to-book multiple of around 2.2, it ticks off a lot of boxes for value-oriented investors. And with the stock continuing to post strong results while achieving modest growth, it’s a good bet to recover from this recent setback.

The bonus for investors that buy today is that they can get a higher-than-normal dividend yield. Thanks to the drop in price, the stock is now yielding around 3% per year. If the company continues to increase its dividend and a rapid pace, investors that hold onto the stock could be earning a lot more in a few years.

Canadian Tire’s dividend of $1.0375 every quarter is more than double what the company was paying back in 2014 when quarterly payments were just 50 cents per share.

While it might be a bit optimistic to expect that kind of growth in the next five years, Canadian Tire has demonstrated a commitment to increasing shareholder value and helping to maximize returns. And with the stock now near its 52-week low, investors could benefit from not just dividend income, but capital appreciation as well if the stock is able to turn things around.

Canadian Tire has been able to grow at a time when other retailers have struggled, proving to be one of the best retail stocks on the TSX, making it a good option for investors looking to buy and forget.