This Cash-Gushing Dividend Stock Could Beat the TSX

The TSX can whip around on headlines, but your Tax-Free Savings Account (TFSA) doesn’t need to. To beat the index, you need a dividend stock that generates cash in good markets and bad ones, then shares that cash without stalling growth.

I look for three traits: strong margins, disciplined spending, and a balance sheet that stays flexible. A steady dividend keeps you invested, and real free cash flow keeps the dividend honest. When a company can also reinvest in high-return projects or buy back shares, it can turn a good decade into a great one.

Consider DPM

Dundee Precious Metals (TSX:DPM) fits that “cash first” profile right now. It runs producing gold and copper assets in Bulgaria, and it expanded its platform after it closed the Adriatic Metals acquisition and added the Vareš operation in September 2025. It also keeps the story easy to follow. It produces metals, sells at market prices, manages costs, and allocates capital with a clear playbook. That simplicity matters when you want a stock you can hold for years without needing a spreadsheet every morning.

Recent results show why investors keep circling back. In its third quarter 2025 update, DPM pointed to record financial performance, strong realized metal prices, and continued progress on integrating Vareš. It also highlighted a robust growth pipeline, including work on Čoka Rakita and ongoing exploration targets that could feed future production. Mining always carries drama, but DPM tries to keep the drama on the drill results, not on the financing.

Into earnings

Now for the earnings detail that matters most for dividend investors: cash. DPM generated $147.7 million of free cash flow in the third quarter of 2025, and it reports in U.S. dollars. That free cash flow matters more than shiny revenue growth because it funds everything you care about. That includes dividends, buybacks, and development spending. Better yet, it can do that without constantly issuing new shares. In a TFSA, that self-funding engine can compound quietly, even if the share price takes a breather.

The profit line also held up. DPM reported adjusted net earnings per share of $0.73 in the same quarter. Management also reconfirmed its 2025 all-in sustaining cost guidance range, which shows confidence in the levers it can control. Investors should still expect volatility, because gold and copper prices never behave politely. Costs can rise, grades can shift, and currencies can swing. Even so, strong quarterly execution builds trust in the next quarter.

Looking ahead

So, can it qualify as a cash-gushing dividend stock? Yes, but you need the right definition of “dividend.” The yield has sat under 1% recently, so it will not satisfy anyone who wants a 6% cheque today. DPM aims for a sustainable baseline dividend and then uses excess cash for buybacks when it sees value. That approach can feel boring, but it often protects investors from painful cuts. If gold drops hard, the market can punish even great operators, so a conservative payout can help it keep paying through the cycle.

The other reason DPM can beat the TSX comes from its ability to pair today’s cash flow with tomorrow’s growth. Integration work at Vareš can lift production over time, and projects like Čoka Rakita can extend the company’s life beyond its current mines. Exploration can also add value without betting the whole business on one expensive deal. On valuation, the dividend stock can still re-rate lower if investors rotate away from miners, so you cannot treat it like a utility. You also need to respect commodity risk and keep your position size sensible.

Bottom line

DPM will not suit every income investor, and that’s fine. If you want maximum yield, you should look elsewhere. If you want a dividend stock that generates real free cash flow, pays a dividend, and still builds its next chapter, DPM looks like a compelling candidate today. The TFSA strategy stays simple: focus on cash discipline, stay realistic about metals volatility, and give compounding the time it needs.

The post This Cash-Gushing Dividend Stock Could Beat 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.