A Dirt-Cheap Canadian Dividend Growth Stock Built for the Long Haul

When investors set out to generate passive income, they often focus on the yield. And while a stock that pays out a good amount is important, there’s also something to be said about how quickly that dividend is growing. An otherwise modest yield can be a great Canadian dividend growth stock in hiding.

That’s where the appeal of Alimentation Couche-Tard (TSX:ATD) comes into focus. As of the time of writing, Couche-Tard offers a yield of 0.92%. That hardly qualifies as an impressive income stock when considering the other higher-yielding dividend stocks on the market.

What that yield is concealing, though, is one of the strongest dividend growth records in Canada. And when factoring in the company’s growing global business and strong earnings outlook, it makes this Canadian dividend growth stock too hard to ignore.

Built to compound for the long haul

For those unfamiliar with the stock, Couche-Tard is one of the largest convenience-store and gas station operators on the planet. The company has operations in 29 countries and boasts a network of over 17,000 stores under several banners.

This gives Couche-Tard more than a few ways to grow. That includes increasing sales, increasing margins, building new stores and completing acquisitions.

Couche-Tard has always taken an aggressive stance towards expansion. The company has developed a knack for identifying acquisition targets and realizing significant synergies from those deals over the years.

Couche-Tard has also been able to take the best elements from those acquisitions and apply them to the entire business. That includes branding, menu items and supply chain logistics, to name a few.

Perhaps most importantly, that strategy works. During fiscal 2026, adjusted diluted earnings per share increased 14.4% to US$3.10.

The company also repurchased 30 million shares during fiscal 2026 and actively opened and redeveloped stores.

The combination of earnings growth, buybacks and expansion makes Couche-Tard a Canadian dividend growth stock that should be on the radar of every investor.

The dividend is small, but the growth isn’t

Couche-Tard’s dividend is tiny. The $0.86 annual payout isn’t going to make a dent in total portfolio income. In fact, it looks more like a rounding error.

But as seasoned investors know, that small yield can become large over time. Just over a decade ago, Couche-Tard’s payout was a micro $0.028 per share. In case you’re wondering, that’s an eightfold increase in the payout over a decade.

That works out to an annualized dividend growth rate of roughly 23% over that period.

Couche-Tard is also committed to maintaining that annual bump. The most recent uptick for 2026 was a 10.5% hike.

For long-term investors who are looking for a Canadian dividend growth stock, Couche-Tard checks off all the boxes, including growth.

In fact, the company is calling for adjusted EBITDA growth of 6% to 8% through fiscal 2030. Over the same period, Couche-Tard expects adjusted diluted earnings-per-share growth to come in at 10% annually.

In other words, that growth is expected to continue, and that’s without factoring in any major acquisitions.

Should investors buy Couche-Tard stock?

Despite the stock climbing to within a few dollars of its 52-week high, Couche-Tard still holds plenty of long-term opportunities. As of the time of writing, the stock trades at a P/E of around 19.

For a company targeting annual earnings-per-share growth of at least 10% through fiscal 2030, that valuation looks attractive for long-term investors.

The company operates a solid business that is increasingly defensive, offers a growing dividend, and still has several avenues for long-term growth.

In my opinion, Couche-Tard is a great Canadian dividend growth stock that every long-term investor should have a small position in.

Buy it, hold it, and watch your long-term well-diversified portfolio grow.

The post A Dirt-Cheap Canadian Dividend Growth Stock Built for the Long Haul appeared first on The Motley Fool Canada.

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Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool has a disclosure policy.