Here is the bottom line, right up front. I think Aecon Group (TSX:ARE) is one of the most compelling buy-and-hold dividend stocks on the TSX today, and the recent pullback gives long-term investors a rare chance to buy a transformed company at a discount.
Valued at a market cap of $3.1 billion, Aecon Group stock is down 20% from its 52-week high. However, the business is fundamentally strong, making it a top buy right now.
Why this TSX infrastructure stock has quietly transformed
A few years ago, Aecon was a civil construction company. It built roads and bridges, which means it was part of a cyclical and competitive segment.
On the June 1, 2026 shareholder call, CEO Jean-Louis Servranckx put it plainly. “We were a few years ago, a road and bridges company, a pure civil company. We have now become a power company,” he said.
More than half of Aecon’s revenue is now tied to power projects, including nuclear, transmission, and utilities. These are sectors with strong, long-lasting demand driven by aging grids, electrification, and energy security.
The crown jewel here is nuclear. Aecon completed the Darlington Nuclear Refurbishment, finishing all four units under budget and four months ahead of schedule. Servranckx noted the work spanned more than 23 million hours over a decade without a single lost-time incident.
That track record is hard to replicate and is precisely what utilities want when handing out the next round of multi-billion-dollar projects.
The bull case for the TSX dividend stock
In 2025, Aecon posted record revenue of $5.4 billion, an increase of 28% year over year. Around 85% of its revenue growth was organic, and the company ended the year with a backlog of $10.7 billion.
In Q1 of 2026, Aecon reported a backlog of $10.9 billion, the highest in company history, while sales rose 18% to $1.3 billion.
Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose to $32 million in Q1, up from $4 million in the year-ago period. The EBITDA improvement was driven by better margins in the construction segment as troubled legacy projects continue to roll off the books.
Aecon has shifted from fixed-price contracts to collaborative ones. Roughly 70% of its work now uses these models. As Servranckx explained, this gives the company “much more margin predictability.”
The balance sheet is healthier as well. Aecon raised $172.5 million through a share offering and used much of it to pay down debt.
A focus on dividend growth
In 2026, Aecon pays shareholders an annualized dividend yield of $0.77 per share, which translates to a yield of 1.6%. While the yield is not too attractive, the company has raised the annual payout from $0.28 per share in 2012.
Analysts tracking the TSX dividend stock forecast free cash flow to increase from $35 million in 2025 to $155 million in 2027. By comparison, its annual dividend expense is around $52 million, suggesting the payout is projected to improve at a stellar pace over the next 18 months.
Aecon sees a wave of “sovereignty projects” coming to Canada. On the Q1 call, Servranckx estimated activity on the order of $125 billion over the next 10 years, with more than half tied to defence.
The company has already landed the Arctic Over-the-Horizon Radar program. It is building small modular reactors at Darlington, working at Bruce and Pickering, and expanding fast in the United States. Management expects its U.S. nuclear revenue to roughly double in 2026.
The Foolish takeaway
Aecon is posting record sales and backlog numbers. Its strategic pivot into power and nuclear will provide it with multiple tailwinds over the upcoming decade.
Aecon is also poised to benefit from expanding margins, allowing it to strengthen the balance sheet and boost dividends, while investing in acquisitions.
Given consensus price targets, the TSX stock trades at a 15% discount in June 2026.