If you’re looking to invest $20,000 in the TSX and create a steady stream of passive income, finding the right mid-cap stocks with strong dividends and growth potential is key. One stock that stands out right now is Parkland (TSX:PKI), a well-established fuel distributor and marketer that has built a resilient business across Canada and beyond. With a history of reliable dividends and a promising outlook, Parkland could be a solid choice for investors aiming to generate consistent income.
The stock
Parkland operates in the retail, commercial, and refining segments, providing fuel and petroleum products to a vast network of consumers and businesses. This diversified business model helps the company weather economic fluctuations, making it an attractive pick for long-term investors. While fuel distribution might not be the most exciting industry, Parkland has consistently grown through acquisitions and strategic expansions, allowing it to maintain strong cash flows and a solid dividend policy.
The company’s most recent earnings report highlighted some of the challenges it has faced but also underscored its resilience. In the third quarter of 2024, Parkland reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $431 million — a decline from the previous year primarily due to lower refining margins. Net earnings came in at $91 million, or $0.52 per share, showing that while the company faced some headwinds, it remains profitable. Revenue growth has been uneven, with fluctuations in fuel prices and demand. Yet Parkland’s ability to manage costs and maintain its dividend remains a positive sign for income-focused investors.
Considerations
One of the biggest factors influencing Parkland’s future performance is its ability to manage debt while growing its business. The company currently carries a relatively high debt load, with total debt standing at $6.32 billion. However, its strong cash flow generation, with an operating cash flow of $1.49 billion over the trailing 12 months, provides some reassurance that it can manage its obligations — all while continuing to reward shareholders.
Beyond its financials, Parkland has been investing in the energy transition by exploring low-carbon fuel solutions and alternative energy opportunities. While this segment is still in its early stages, it demonstrates that the TSX stock is thinking about long-term sustainability and adapting to changing market conditions. This forward-thinking approach could help Parkland remain a relevant and profitable company in the years to come.
Bottom line
For those looking to create passive income, while also benefiting from potential capital appreciation, Parkland offers a compelling opportunity. Its strong dividend yield, history of steady payouts, and strategic growth initiatives make it a solid mid-cap stock to consider for a long-term investment. But how much could that $20,000 bring in?
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
| PKI | $33.50 | 597 | $1.40 | $835.80 | quarterly | $20,000 |
Investing in dividend-paying stocks like Parkland allows investors to benefit from both income and potential stock price gains. With the company maintaining a strong position in the fuel distribution industry and looking for ways to grow beyond traditional energy markets, it presents an attractive mix of stability and future potential. Whether you’re looking to reinvest dividends for compound growth or use them as a source of cash flow, Parkland is a TSX stock worth considering for a $20,000 investment.