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Alimentation Couche-Tard: A Dividend Growth Investment For The Long Term

DGI Journeyman profile picture
DGI Journeyman


  • Alimentation Couche-Tard has grown from one lonely store in Quebec into an international gas station/convenience store giant with over 16,000 locations.
  • The company's breakneck rate of expansion is strongly reliant upon debt, and the coming electric vehicle revolution could render the gas station model obsolete.
  • Nonetheless, the company's M&A track record, dividend history, and EV charging station pilot projects suggest that it may be able to navigate the transition to electric vehicles while growing its payout.

The retail industry is in the midst of a sea change. As e-commerce becomes a more and more predominant channel of retail trade, so-called "brick-and-mortar" retailers are falling out of favor. While many of these outlets are likely to die out as Amazon (AMZN) and its ilk take more and more market share away from them, mostly on the basis of superior price and ease of ordering, one traditional retail segment may survive - the convenience stores.

These stores allow customers to pick up items at literally "a moment's notice," even if not necessarily at the lowest available price. This is a value proposition that e-commerce sites cannot match. As a result, I believe that convenience stores have a robust future ahead of them.

One group of convenience stores, which may be a good consideration for future investment, is Alimentation Couche-Tard (OTCPK:ANCUF). This company, whose operations in the US are generally conducted under the "Circle K" brand, got its start in 1980 with a single store in the Canadian province of Quebec. Over the years, Couche-Tard has grown via organic growth and acquisitions into an international behemoth with over 16,000 stores in 25 countries and regions.

The company's locations typically comprise a fueling station combined with an attached convenience store. Sometimes, the company will own and operate the entire facility. Other times, Couche-Tard leaves the operation of either the retail or fuel portions of these locations to another partner. Couche-Tard also licenses its name out entirely to locations that are independently owned.

A look at Couche-Tard's international network illustrates the vast reach of its operations. The company has significant operations in the US, Canada, and Europe. The rest of its worldwide retail footprint typically consists of independent operations operating under a license agreement with Couche-Tard.

Couche-Tard has shown extreme willingness

This article was written by

DGI Journeyman profile picture
Indiviudal investor building a dividend income portfolio in order to achieve a personal goal of financial security both now and in the future. Looking to share my portfolio research with and receive feedback from the SA community. Enjoys action movies, pizza, long walks on the beach, and dividend increases.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (2)

It is good to hear ANCUF is piloting EV charging stations however it should have minimal impact in the intermediate term. IMO, it will take years before EVs command sufficient market share have a significant impact. What I believe drives this company in the immediate term is their ability to manage debt and continue acquiring convenience stores. Suggestions of Amazon getting into the $1T convenience store market is an interesting 'potential' dynamic that should reinforce ANCUF's need to continue to consolidate the industry, either as a defensive strategy, or position them self as the acquisition of choice for AMZN.
Edward J. Roche profile picture
Solid improvement in latest quarter, excellent management, strong financial history.

I own it.

Thanks for the article.
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