A Canadian Stock up 40%, and Still 1 of the Best on the TSX

This stock already surged, but that doesn’t mean investors should look away. PHX Energy Services (TSX:PHX) has had a huge run in 2026. Shares started the year near $7.50 and recently traded near $11, giving investors a gain of about 40% before counting dividends. That kind of move usually makes investors nervous. Nobody wants to buy after the easy money already came through.

PHX

Yet PHX still looks like one of the more interesting dividend stocks on the TSX today. Not because it’s safe in the same way a bank or utility feels safe. It isn’t. But because it combines a high yield, strong shareholder returns, technology-driven growth, and exposure to an energy services market that can still reward the right operator.

PHX Energy provides directional drilling services and technology to oil and natural gas producers. Its Phoenix Technology Services division helps companies drill more efficiently, especially in complex horizontal wells. The Canadian stock rents performance drilling motors, sells equipment and parts, and deploys rotary steerable systems, better known as RSS. Those tools matter because energy producers want to drill faster, more accurately, and at lower cost.

Into earnings

The latest quarter showed both strength and caution. In the first quarter of 2026, PHX generated $183.9 million in revenue. That was 5% lower than the same quarter last year, but still the second-highest first-quarter revenue in company history. RSS activity hit a record and represented 18% of consolidated activity, up from 15% last year.

Industry drilling activity softened in Canada and the United States, yet PHX kept showing strength in its higher-value technology business. In the U.S., RSS represented 26% of operating days. In Canada, RSS reached 10% of operating days, up from 6% last year.

The dividend story also grabs attention. PHX pays a regular quarterly dividend of $0.20 per share, or $0.80 annually. Around recent prices, that puts the yield around 7.3%. The Canadian stock also declared a special $0.20 dividend earlier this year, rewarding shareholders after a strong 2025. Even with its normal dividend, $7,000 could bring in a fair amount.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTPHX$10.71653$0.80$522.40Quarterly$6,993.63

Considerations

Still, investors need to respect the risks. PHX earned $8.9 million in the first quarter, down from $20.2 million a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also fell to $30 million from $40.7 million. Higher depreciation and share-based compensation weighed on results. Net debt rose to $43.4 million from $6.4 million at the end of 2025, partly because the Canadian stock funded capital spending, dividends, and working capital.

That doesn’t wreck the thesis, but it does keep expectations grounded. PHX operates in energy services, not a sleep-at-night utility. If drilling activity weakens further, revenue and cash flow can feel pressure. If oil and gas producers pull back, PHX could fall quickly after its strong rally.

Even so, PHX still stands out. The company keeps investing in growth technologies, including RSS and real-time communications tools. It increased its 2026 capital budget to $65 million, with about 60% aimed at growth. That shows management still sees demand for its premium fleet.

Bottom line

For dividend investors, the appeal comes from the full package. PHX offers a high yield, a shareholder-friendly capital plan, a strong niche in drilling technology, and a stock that still doesn’t look wildly expensive after its run. The 40% gain may scare some investors off. But strong stocks can keep working when the business supports the move.

The post A Canadian Stock up 40%, and Still 1 of the Best on the TSX appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe 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.