Beat the TSX With This Cash-Gushing Dividend Stock

If you think the only way to outperform the TSX is by chasing high-growth tech stocks, you might be taking on more risk than necessary. That’s because some of the most reliable performers in the stock market are in traditional sectors, operate stable businesses, and pay out generous dividends while working on consistent expansion.

And currently, Atco (TSX:ACO.X) fits that description well. It’s not one of the most popular dividend stocks out there, but it plays a crucial role in developing and maintaining core infrastructure at home and abroad. And with a track record of strong cash flow and steady dividend hikes, it has quietly emerged as a leader in its niche. In this article, I’ll explain why Atco could be one of the best dividend stocks on the TSX today for long-term investors.

A cash-gushing TSX dividend stock to buy

If you haven’t come across it before, Atco is a Calgary-based multiline utility company operating across several segments, including energy transmission, natural gas distribution, modular structures, and logistics. After climbing by nearly 12% over the last three months, its stock currently trades at $53.36 per share with a market cap of $6.1 billion. ACO.X offers a quarterly dividend that yields 3.8% annually at the current market price.

Atco’s recent gains weren’t driven by hype, but by steady contract wins, growing recurring revenue, and a strong focus on expanding regulated utility operations. And now, it appears to be setting the stage for even bigger upside.

Earnings growth backed by major investments

In the third quarter, Atco’s adjusted earnings climbed 14% year-over-year to $103 million. These improvements in its profitability came despite some industry-wide softness in EBITDA (earnings before interest, taxes, depreciation, and amortization) and limited revenue visibility during the quarter, showing how well Atco is managing cost efficiency and core operations.

Moreover, the company made $402 million in capital investments last quarter, with 95% directed toward regulated utilities like Atco Energy Systems and Atco Australia. These investments are expected to translate into future earnings growth and continued dividend support. These strong numbers show that Atco can not only maintain its payouts but also continue building long-term value.

Massive projects could fuel future cash flow

Atco is currently advancing two major projects: the Yellowhead Pipeline and the Central East Transfer-Out (CETO) transmission line.

On the one hand, its $2.9 billion Yellowhead project just cleared a major regulatory hurdle. Its construction is likely to start in 2026, and once complete, it’ll significantly enhance Alberta’s energy infrastructure. On the other hand, CETO is already underway and scheduled to be energized by mid-2026, with a total cost of $255 million. This project alone will help supply 1,500 megawatts of electricity to Alberta’s grid.

What’s impressive here is not just the size of these projects, but the predictability of the returns. These are regulated assets, which means stable revenue over time, a key reason why Atco remains such a reliable dividend stock.

These factors could help this dividend stock outperform the TSX

Atco’s growth story doesn’t stop at pipelines and power lines, as its structures and logistics segment is quietly winning some massive contracts. In the latest quarter, Atco’s structures division secured a $179 million contract in Idaho for the Stibnite Gold Project, the largest in its U.S. operating history. It also picked up over $80 million worth of new modular rental and housing contracts across Canada, the U.S., and Australia.

This global expansion could not only add more revenue but also further diversify Atco’s cash flow sources – making this cash-gushing TSX dividend stock even more attractive for long-term investors.

The post Beat the TSX With This Cash-Gushing Dividend Stock appeared first on The Motley Fool Canada.

Should you invest $1,000 in ATCO Ltd. right now?

Before you buy stock in ATCO Ltd., consider this:

The Motley Fool Stock Advisor Canada analyst team identified what they believe are the 15 best stocks for investors to buy now… and ATCO Ltd. wasn’t one of them. The 15 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,105.89!*

Now, it’s worth noting Stock Advisor Canada’s total average return is 95%* – a market-crushing outperformance compared to 72%* for the S&P/TSX Composite Index. Don’t miss out on our top 15 list, available when you join Stock Advisor Canada.

See the 15 Stocks #start_btn6 { background: #0e6d04 none repeat scroll 0 0; color: #fff; font-size: 1.2em; font-family: 'Montserrat', sans-serif; font-weight: 600; height: auto; line-height: 1.2em; margin: 30px 0; max-width: 350px; text-align: center; width: auto; box-shadow: 0 1px 0 rgba(0, 0, 0, 0.5), 0 1px 0 #fff inset, 0 0 2px rgba(0, 0, 0, 0.2); border-radius: 5px; } #start_btn6 a { color: #fff; display: block; padding: 20px; padding-right:1em; padding-left:1em; } #start_btn6 a:hover { background: #FFE300 none repeat scroll 0 0; color: #000; } @media (max-width: 480px) { div#start_btn6 { font-size:1.1em; max-width: 320px;} } margin_bottom_5 { margin-bottom:5px; } margin_top_10 { margin-top:10px; }

* Returns as of November 17th, 2025

More reading

• 1 No-Brainer Buy and Hold Canadian Stock

Fool contributor Jitendra Parashar 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.