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The annual TSX30^Ⓡ ranking is a chance to celebrate the companies that were the leaders on ÍÃ×ÓÏÈÉú (TSX) based on dividend-adjusted share price performance over a three year period. Historically, companies listed on the TSX30 have generally delivered strong returns to shareholders, and have helped drive the markets forward with their vision. The companies included in the 2024 cohort created over $210B of market capitalization on TSX, almost a quarter of a trillion dollars of value creation.

The TSX30 program provides an opportunity to look at important themes that are playing out among some of the top performing companies on TSX that investors may want to consider. Capital efficiency stood out across the companies included in the 2024 TSX30. While these companies delivered average dividend adjusted growth rates of 234%¹, they also did this while concentrating on organic growth and funding mergers and acquisitions (M&A) without raising a lot of capital.

TSX30 Dividends as part of Returns

The role of dividends and yield across the returns generated by this year's companies stood out. When looking back to 2021, some supply chains and business models were being upended by the global pandemic; growth could have been a powerful theme as investors may have been looking to capture these shifts in different industries as different services and business models moved online. Investors in Canada and around the world showed a large bias to growth metrics. This further played out during 2021 in a global wave of IPOs where innovation companies valued based on strong growth metrics came to the market.

Below are two key metrics contrasting the 2021 TSX30 companies with the 2024 TSX30 companies.

*Based on all 30 companies on the TSX30 ranking (including those that did not pay a dividend).

Investors and portfolio managers typically have a lot of different inputs that they can reflect on as they make investing decisions. While the TSX30 looks at a historical three-year period, there may be value in evaluating changes or trends in the markets and whether they will continue or reverse.

While share price growth was one of the key metrics for the TSX30, the contribution from dividends was also noticeable. Our data shows that approximately 10% of the returns for this year's companies were driven by dividend payments to investors. Compared to the 2021 cohort, this represents more than a 5 times increase in the role that dividends represented as a percentage of the total growth that was created for investors.

TSX30 Acquisitions Funded Through Cash Flow

Over the three year period, the 2024 TSX30 as a cohort completed around 30 acquisitions, while only seven of the TSX30 companies completed an equity raise. This demonstrates that these companies were driving the business forward mostly through organic growth, and that they were generally funding this growth and M&A without raising equity capital.

It's not surprising that investors rewarded companies that exhibited these types of traits and behavior. During the last three years, there has been lots of focus on inflation and higher interest rates, which in turn made raising equity capital more challenging. Being able to power growth both organically and through M&A without raising capital is another factor that stands out when you look across this cohort.

Conclusion

This year's TSX30 companies outperformed their peers on TSX over the three-year period based on dividend-adjusted share price performance. Within that performance, we see there is a changing emphasis on growth metrics, and that a disciplined approach to yield and accessing capital are things that define this year's companies. It will be interesting to see whether these trends will continue as we progress through 2024 and beyond.

¹ All data is sourced from TSX/TSXV Market Intelligence Group analysis. Based on historical dividend-adjusted share prices from S&P Capital IQ as at June 30, 2024.

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