When it comes to finding a solid dividend stock on sale, investors want to think about the future more than the past. That’s why today we’re considering TFI International (TSX:TFII). This dividend stock is a logistics powerhouse on the TSX that has garnered attention despite its recent 10% drop over the last three months. This drop doesn’t paint the whole picture, as TFI remains a strong stock with significant upside potential. Let’s dive into why TFII is still a magnificent choice for investors.
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Into earnings
In its most recent quarter, TFI International reported robust results. With revenue before fuel surcharges reaching $1.96 billion and operating income of $208 million, the dividend stock showed resilience in a challenging freight market. The freight sector is facing headwinds, and TFI’s management, led by CEO Alain Bédard, is focusing on cost efficiency to navigate through this downturn. Its approach to streamline operations and reduce debt, with plans to cut $500–$600 million in 2024, has kept the company in solid shape despite tough conditions
So, why is the stock down? One factor is the weakness in the U.S. less-than-truckload (LTL) market, a key segment for TFI. This has been affected by pricing challenges and lower demand. This sector’s underperformance has weighed on the overall stock price. Even though the dividend stock has been working to improve efficiency and service levels. Plus, macroeconomic concerns, such as a freight recession expected to continue into 2025, are causing conservative investor sentiment
TFI’s management is not sitting idle. They are addressing these challenges by focusing on internal improvements, including enhancing logistics operations and growing last-mile delivery services. Notably, their logistics segment has been a standout performer, seeing revenue grow by 24%, which offers hope for long-term recovery.
Looking ahead
Looking ahead, TFI International’s future remains bright. The dividend stock has provided full-year earnings per share (EPS) guidance of $6.75 to $7. Plus, it reported free cash flow estimates between $825 million and $900 million. Add to this the recent acquisition of Daseke, which is expected to bolster TFI’s truckload operations and improve financial performance. All this adds further strength to its business.
For income-focused investors, TFI’s consistent dividend payments are another highlight. The dividend stock has maintained dividends for 23 consecutive years. A lifetime of payments already! And it recently declared a quarterly dividend of $0.40 per share, showing its commitment to returning capital to shareholders. So, if shares were to jump back up by 10% and add on those dividends, here is what a $10,000 investment could turn into.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT |
| TFII – now | $195 | 51 | $2.16 | $110.16 | quarterly | $10,000 |
| TFII – 10% | $214.50 | 51 | $2.16 | $110.16 | quarterly | $10,939.50 |
Now you have $110.16 in dividends and $939.50 in returns. In total, this dividend stock offers up $1,049.66 in passive income!
Bottom line
Altogether, while the recent stock decline may cause concern, TFI International is well-positioned to ride out the current freight recession. With a strong management team, solid cash flow, and plans for debt reduction, TFI is laying the groundwork for future growth. The current price dip could be an excellent buying opportunity for investors looking at the long-term potential of this logistics leader.
