A Canadian Dividend Pick Down 25%: A “Forever” Hold

GFL Environmental (TSX:GFL) is down roughly 25% from its highs, and I think it is among the best buying opportunities in the Canadian market right now.

The business is hitting record margins, growing free cash flow in the double digits, and just announced a transformational acquisition that makes it a larger company.

Here is what you need to know.

A recession-resistant business with best-in-class numbers

GFL is one of the largest waste management companies in North America. It collects, transfers, and disposes of solid waste across 25 U.S. states and all 10 Canadian provinces. It also processes recyclable materials, operates landfills, and is building out a portfolio of renewable natural gas facilities.

Waste is one of the most durable businesses on the planet. It is non-discretionary, recession-resistant, and driven by long-term contracts with municipalities and commercial customers.

According to the company’s Q4 2025 earnings call, GFL achieved a 30% adjusted EBITDA margin (earnings before interest, tax, depreciation, and amortization) for the first time in its history.

That is a 130-basis-point improvement over 2024. CEO Patrick Dovigi credited ongoing pricing discipline, improving employee retention, fleet optimization, and procurement efficiencies across the platform.

Full-year adjusted EBITDA came in at $2 billion, more than $50 million above the high end of the company’s original guidance on a constant-currency basis.

Adjusted free cash flow stood at $756 million in 2025 and is forecast at $850 million in 2026, an increase of 14% year over year.

The SECURE acquisition widens moat

Earlier this month, the TSX dividend stock announced a definitive agreement to acquire SECURE Waste Infrastructure for an enterprise value of approximately $6.4 billion. It is a highly strategic, financially accretive deal that accelerates GFL’s long-term targets by years.

SECURE operates more than 80 waste infrastructure facilities across Western Canada, including 12 major landfills, 12 recycling facilities, five transfer stations, and treatment and storage assets. It generates mid-30s adjusted EBITDA margins with a free cash flow conversion of over 50%.

According to the M&A call transcript, the deal is expected to increase GFL’s adjusted EBITDA by 27% and boost adjusted free cash flow by roughly $300 million to roughly $1.5 billion. Adjusted free cash flow per share would increase approximately 15%.

All of this is being done on a leverage-neutral basis, keeping net debt within GFL’s stated target range of low- to mid-three times EBITDA.

Is the TSX dividend stock a good buy?

GFL is not a high-yield dividend stock in the traditional sense. It pays a modest dividend yield of 0.1%, and the real income story here is the buyback.

In 2025, GFL repurchased $3 billion of its own stock, including $750 million in incremental buybacks when the share price fell sharply in the second half of the year.

Management has been crystal clear that they view the stock as materially undervalued and will remain aggressive when the price presents an opportunity.

Dovigi noted on the Q4 call that even with $1.5 billion to $2 billion in annual M&A spend, GFL can still delever 15 to 20 basis points per year. That leaves room for continued buybacks and eventual dividend growth as free cash flow scales.

GFL is a high-quality business at a discount price. For long-term investors, this is the kind of stock you buy and hold forever.

The post A Canadian Dividend Pick Down 25%: A “Forever” Hold appeared first on The Motley Fool Canada.

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More reading

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Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.