This Canadian Dividend Stock Is Down 50% and Worth Holding Forever

Let’s get right to it. Pet Valu Holdings (TSX:PET) is down roughly 50% from its all-time high, and the stock looks broken, but the business continues to grow at a steady pace.

In fact, Pet Valu just wrapped up one of its most operationally impressive years ever.

• Revenue grew 7% in 2025.
• Same-store sales turned positive again, and free cash flow rose to $104 million.
• And management handed shareholders a record $121 million in returns through dividends and buybacks.

It shows that Pet Valu is a company on sale. I think Pet Valu is one of the most compelling long-term buys in the Canadian market right now.

Here is why.

Pet Valu is Canada’s dominant pet specialty retailer

Before getting into the numbers, it helps to understand what Pet Valu is.

The company operates and franchises pet specialty retail stores across Canada under multiple banners, including Pet Valu, Bosley’s, and Chico.

As of the end of fiscal 2025, it had 863 stores nationwide. That is nearly four times as many locations as its nearest pet specialty competitor, according to Pet Valu Chief Executive Officer Greg Ramier.

In a niche retail category, demand tends to be sticky, where customers shop regularly and spend consistently regardless of what the broader economy is doing.

Pet ownership does not decline during recessions, as pet parents are unlikely to stop purchasing food, medication, and accessories. That makes Pet Valu’s business far more defensive than most retailers’.

The bull case for PET stock

In 2025, Pet Valu increased sales by 7% year over year, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins held steady at a healthy 22%.

Management also completed a nearly $100 million, four-year supply chain transformation in 2025. The company now operates more than 1.3 million square feet of modern, partially automated distribution capacity across three facilities.

Ramier noted on the May 12 call that this investment has already driven a 60% improvement in productivity, with further gains expected.

That is a long runway of cost leverage that has not yet fully shown up on the bottom line. As those savings flow through, margins should expand further.

The loyalty program is also firing on all cylinders. Pet Valu hit a record loyalty sales penetration rate of 88% in 2025. In other words, nearly nine out of every 10 dollars in sales came from repeat, loyal customers.

Pet Valu’s franchise network expanded to 370 owner-operators running 600 franchise stores. The company opened 40 new stores in 2025 and plans to open roughly 40 more in 2026.

Milestones were hit across every major banner, including surpassing 100 locations each in Bosley’s in British Columbia, Pet Valu in Alberta, and Chico in Quebec.

The pullback allows Pet Valu investors to benefit from a dividend yield of almost 3%. Given consensus price targets, the TSX dividend stock trades at a 31% discount in June 2026.

Notably, Pet Valu has raised the annual dividend from $0.04 per share in 2022 to $0.52 per share in 2026, significantly raising the yield-at-cost.

The TSX dividend stock is a forever hold

Canadians are spending more on their pets year after year. The trend toward premium and specialty pet food is not slowing down.

Pet Valu’s culinary experience, which rolled out across 130 corporate stores in 2025, is now expanding into the franchise network. That premium positioning targets some of the highest-lifetime-value customers in the category.

Add in a clean balance sheet, a growing dividend, a disciplined capital return program, and a franchise model that is asset-light by design, and you have a business built to generate compounding returns over the long haul.

The stock being down 50% is not a reason to avoid it. For patient investors, it is a reason to seriously consider owning it.

The post This Canadian Dividend Stock Is Down 50% and Worth Holding Forever appeared first on The Motley Fool Canada.

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