A year later, the best dividend stocks usually look a little different than they did on day one. Yield still matters, of course, but so do the things that keep that income growing: steady sales, room for expansion, a payout that does not look reckless, and a business model that can handle a weaker economy. It also helps when the market is still thinking of a company as the old version of itself, while the business has already moved on. That is exactly why this dividend stock stands out.
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A&W
That leads us to A&W (TSX:AW). Under the old fund structure, investors mostly got exposure to royalty income and monthly distributions. After the transaction, shareholders gained direct exposure to the full A&W business, including new restaurant openings, margin expansion, new concepts, and the retail root beer business. In other words, the dividend stock went from a fairly straightforward income vehicle to a dividend name with more ways to grow.
Over the last year, that bigger story started to show up in the numbers and the headlines. The strategic combination itself was the main event, but it was followed by a new loyalty program launch, executive appointments, and continued store growth. By the end of fiscal 2025, A&W had 1,094 restaurants, up from 1,073 a year earlier.
What surprised me most was that the dividend stock did not need a dramatic turnaround to become more interesting. It just needed a better structure. A&W still sells burgers, onion rings, and root beer, which is not exactly futuristic stuff. But it is familiar, dependable, and still expanding. That kind of business can be a lovely fit for dividend investors when it throws off cash and keeps opening new locations without trying to reinvent the wheel every quarter.
Earnings proof
The latest earnings gave the thesis more support. For fiscal 2025, system sales rose 2.8% to $1.92 billion, revenue increased 1% to $294.1 million, and income before taxes jumped 53% to $76.7 million. Net income came in at $56.8 million, up from $21.7 million in fiscal 2024, while net income per share reached $2.30. Those are not eye-popping growth-stock numbers, but they are strong enough to make a dividend investor sit up a little straighter.
The fourth quarter also looked steadier than the market might have expected. Same-store sales growth came in at 0.9%, system sales rose 2.5%, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin improved to 31.5% from 30% a year earlier. That margin improvement suggests the business is not just growing a bit, but doing so with better operating leverage.
The valuation helps seal the case. As of mid-March 2026, A&W carried a market cap of about $870 million, traded around $36 per share, and had a trailing price-to-earnings ratio of about 15.8. That is not bargain-basement cheap, but it also does not look excessive for a franchisor with a national brand, a 5.3%, and room to keep growing. Management’s 2026 guidance calls for adjusted EBITDA of $103 million to $105 million, restaurant count of 1,112 to 1,120, and system sales growth of 2.5% to 5.0%, even while acknowledging a challenging economic backdrop in Canada. Meanwhile, investors can bring in ample income even from $7,000.
Bottom line
So, yes, a year later, this is the Canadian dividend stock that surprised me most. Not because it suddenly became flashy, but because it quietly became better. The old AW.UN income story turned into a fuller growth-and-income story, and the market still seems to be weighing what that could mean over time. For dividend investors who like familiar brands, decent growth, and a payout that still looks attractive, A&W has become much more interesting than it first appeared.
