The Canada Revenue Agency (CRA) recently announced tax bracket adjustments for 2025, reflecting the ongoing inflationary environment. These adjustments aim to ensure that Canadians are not pushed into higher tax brackets purely due to cost-of-living increases. While this indexing provides some relief, the reality is that higher-income earners may still face larger tax bills, particularly as federal and provincial tax rates adjust to accommodate new fiscal policies. For those looking to mitigate these increases, strategic investing becomes an essential tool.
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Consider goeasy
Investing in a company like goeasy (TSX:GSY) can be an effective way to counterbalance tax increases. GSY, a Canadian alternative financial services provider, has consistently delivered strong financial results, making it an attractive option for growth-focused and dividend-seeking investors. As of this writing, GSY’s stock price sits at $172, showing resilience and growth in a challenging market. With a forward price-to-earnings (P/E) ratio of 8.47 and a trailing annual dividend yield of 2.61%, the stock provides both value and income potential.
In its most recent quarterly earnings report (Q3 2024), goeasy stock posted a 28.1% year-over-year increase in quarterly earnings and a 5.1% growth in revenue, bringing its total revenue for the trailing 12 months to $803.91 million. The company’s profit margins are impressive, with a net profit margin of 35.31% and a return on equity of 25.75%, highlighting efficient management and profitability. For investors concerned about rising costs and taxes, these metrics underscore GSY’s ability to generate strong returns.
Historically, goeasy stock has been a standout performer on the TSX. Over the past five years, it consistently outpaced the market, growing its market capitalization from $1.76 billion in 2023 to its current $2.87 billion. This growth is supported by strategic expansions in its loan offerings and the ability to adapt to evolving consumer credit demands. GSY’s stock has a 52-week high of $206.02, showing room for potential recovery from its current price, especially as broader economic conditions stabilize.
Future focus
Looking ahead, goeasy stock is well-positioned to continue its upward trajectory. Analysts project robust earnings growth driven by its expanding portfolio of consumer loans and its ability to navigate economic headwinds. With a low forward P/E ratio and a consistent dividend payout ratio of 27.26%, GSY offers a balanced mix of growth and income, making it an appealing choice for investors looking to build wealth over time.
Investing in dividend-paying stocks like goeasy stock is particularly advantageous in a rising tax environment because dividends in Canada are taxed at a lower rate compared to other forms of income. GSY’s annual forward dividend rate of $4.68 represents a solid return for shareholders while providing a hedge against inflation and tax increases. Additionally, its upcoming dividend offers investors an opportunity to lock in returns early in the year.
Moreover, the company’s strong cash position of $238.57 million and a current ratio of 16.28 indicate financial stability. This is crucial during uncertain economic times. Its debt-to-equity ratio of 292.63% may seem high. Yet, it is typical for companies in the financial sector and reflects its capital-intensive business model. goeasy stock’s ability to manage this debt effectively has been proven through its consistent earnings growth.
Bottom line
For Canadians looking to offset rising tax burdens, building a diversified portfolio with stocks like goeasy can provide long-term financial benefits. By combining capital appreciation with dividend income, investors can create a tax-efficient strategy. One that protects their purchasing power and grows their wealth. This approach aligns with the broader trend of leveraging investments to navigate an inflationary and high-tax environment.
So, while tax increases are never welcome news, these underscore the importance of making your money work harder. Investing in quality stocks like goeasy stock not only offers a hedge against inflation and taxes. It also positions you to benefit from strong financial performance and shareholder-friendly policies. With its track record of success and promising future, goeasy stock is a compelling option, especially for investors looking to build wealth in 2025 and beyond.
