Best yet for investors, management has shown an appetite for expanding beyond these 20 states as well, using mergers and acquisitions (M&A) recently to tiptoe into valuable new markets such as Texas, Tennessee, and Florida.

Building through (and upon) acquisitions

Not only do these M&A deals move Casey's into new areas, but they also tend to be immediately accretive to earnings thanks to the company's recently formed M&A team.

This M&A team typically looks for smaller c-store chains where they can integrate the Casey's kitchen "know-how." By adding new (or upgrading subpar) kitchen capabilities, Casey's typically boosts these newly acquired stores' inside sales by 20% and their earnings before interest, taxes, depreciation, and amortization (EBITDA) by 70%.

Since Casey's prepared food and beverage sales have a high gross margin of 58%, the added kitchen capabilities help the company generate a 15% return on investment on the average store it acquires and integrates into its model.

Best yet, many of Casey's more recent acquisitions have been in larger cities than those it historically served. Yet the company's cash return on invested capital (ROIC) has continued to climb, showing that it seems to be succeeding in bigger cities.

Should this figure continue rising -- and Casey's continues to report success in bigger markets -- its store count expansion potential could be massive.

Immense dividend potential

Though Casey's may only pay a 0.5% dividend yield, its dividend potential should not be ignored. First off, despite raising its dividend annually for 25 consecutive years, the company's payouts currently only use 13% of its net income.

Management could theoretically spike its dividend yield to 3% and still have net income left over. However, it doesn't want to do this, considering it would rather use its excess earnings on its expansion plans.

Even as Casey's grew its store count over the last 25 years, an investor who bought shares in 2000 and held until today would now receive a 20% dividend yield compared to their original cost basis. This shows the power of buying and holding dividend growers like Casey's.

With management expecting EBITDA to grow by 8% to 10% over the long term, while maintaining a payout ratio between 15% and 20%, double-digit dividend growth could be on the horizon for investors.

Why it's still OK to buy near all-time highs

There's no way to sugarcoat it, Casey's trades at a loftier valuation now than it normally does.

However, I don't believe this is simply an overvaluation from the market. Instead, I think the market has taken note of Casey's store count expansion story and the fact that the company has grown its net income by 19% annually over the last decade.

While this price-to-CFO (cash from operations) ratio of 16 is higher than usual for Casey's, it isn't outrageous compared to the broader market. For instance, if Casey's gave up on all of its growth ambitions and only spent money on maintenance capital expenditures, it would trade at around 18 to 20 times free cash flow (FCF).

This is a hefty discount to the S&P 500 's average price-to-FCF ratio, which is somewhere closer to 30. Obviously, we don't want Casey's to quit spending on growth, but I wanted to give this comparison to show its relatively cheap valuation compared to the broader market.

As Casey's continues to steadily march across the U.S. and raise its dividend annually -- all at a sub-market valuation -- I'm perfectly happy to add to my daughter's winning position, even with shares back near all-time highs.

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Josh Kohn-Lindquist has positions in Casey's General Stores. The Motley Fool recommends Casey's General Stores. The Motley Fool has a disclosure policy .

1 Magnificent Dividend Stock to Buy Right Now as It Soars to New All-Time Highs was originally published by The Motley Fool