Written by Christopher Liew, CFA at The Motley Fool Canada
Income-oriented investors follow a simple strategy: they focus on good companies that pay high dividends regularly. They avoid dividend traps as much as possible, because they hate declining cash flows. Keyera (TSX:KEY), Acadian Timber (TSX:ADN), and Timbercreek Financial (TSX:TF) are not as celebrated as other TSX stocks, but they pay generous dividends.
All three are nice to have in your stock portfolio because of their ultra-high dividend offers. The yield is more than 6% and up to as much as 7%. If you’re a long-term investor, your capital could double in 10-12 years.
Income and growth
Keyera not only pays a 6.27% dividend, but the payouts are monthly, not quarterly. Since the frequency is eight times more (12 in a year), the investment’s value will compound faster if you keep reinvesting the dividends. The current share price is $30.47.
The $6.73 billion midstream oil & gas operator is known for its growth projects. Since Keyera’s inception in 1998, management’s goal was to build a strong industry reputation and deliver top-notch energy infrastructure solutions. Over the last three years, the company completed three noteworthy growth projects.
The Keylink NGL gathering system, completed in 2018, connects Keyera’s eight gas plants into its Rimbey gas plant for fractionation. Also, the company signed a 20-year infrastructure development and midstream service agreement with Encana. In 2019, Keyera’s North Wapiti Pipeline System (NWPS) and Simonette expansion project began operations.
The Pipestone gas plant, a joint development with Ovintiv, started operations. Keyera also entered a 15-year power-purchase agreement (PPA) with Samsung Renewable Energy. The energy stock is a combination of income and growth.
Acadian Timber is a pure dividend play. The basic materials stock trades at $17.95 per share and pays an over-the-top 6.43% dividend. It has also shown resiliency in the stock market with its 14.86% year-to-date gain. This $299.53 million company from New Brunswick owns timberlands in eastern Canada and the northeastern United States.
The business model and strategy are straightforward. It utilizes timberland assets through sustainable forest management and other land use activities to grow the business and maximize cash flows. Acadian continues to acquire assets on a value basis then actively managing them to drive improved performance.
Acadian’s business suffered in 2020 but came back strong this year. In the first half of 2021, sales and net income grew 3.36% and 672.2% versus the same period last year. Erika Reilly, Acadian’s president and CEO, expects continued steady demand for its lead products, namely softwood and hardwood sawlogs, hardwood pulpwood, and biomass.
No better deal than this
Timbercreek Financial in the mortgage finance industry is a suitable investment for risk-averse investors. The $793.38 million non-lender is more stringent than banks or traditional lenders, and financial institutions. Besides the short-term nature (fewer than five years) of its lending policy, the loan-to-value ratios are high.
The lending business displayed stability again in Q2 2021, where net income rose 15.38% to $13.5 million compared to Q2 2020. Expect Timbercreek to maintain its conservative portfolio risk position and focus only on income-producing commercial real estate. There’s no better deal at $9.78 per share and a 7.11% dividend than this one.
Solid income stocks
The least-celebrated stocks are sometimes the best risk-and-reward options for investors. Keyera, Acadian Timber, and Timbercreek are solid income stocks. Buy them now to boost your dividend earnings.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends ACADIAN TIMBER CORP. The Motley Fool recommends KEYERA CORP.