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5 Canadian Consumer Stocks Rewarding their Shareholders

Best Dividend stocks, Blog, Canadian Dividend Stocks, Dividend Growth

Five years ago, I created Dividend Stocks Rock. The idea was to build the most comprehensive and effective dividend investing platform. Throughout the past five years, our portfolios have done very well (see for yourself). A key part of this success is attributed to asset allocation.

For our Canadian portfolios, we went against the current and diminished our energy position to a minimum. To this date, I’m still not a fan of energy dividend stocks. I keep a very small amount of companies on my watch list.

On the opposite, I’m a big fan of both consumer defensive and consumer cyclical stocks. The first sector adds stability to your portfolio and provides investors with steady dividend growth. The latter is all about growing through healthy economies. A mix of both was definitely a winning strategy for the past five years. Here are five of my favorite consumer (defensive or cyclical) companies on the Canadian market.

Metro (MRU.TO)

Metro operates over 600 grocery stores under banners such as Metro, Super C and Food Basics. It is mainly active in Quebec and Ontario. Metro also has a pharmaceutical sector operating 250 drugstores under banners such as Brunet, Clini Plus, and Pharmacy & Drugs basics. Finally, Metro operates a pharmaceutical distributor named McMahon, which has about 200 affiliated pharmacists. Metro completed the acquisition of Jean Coutu in May of 2018.

Metro has put a strong emphasis on its private-label brands which sell for 20% less than original products. In a world where price is the first consumer driving decision factor, this is a key advantage. We like the recent acquisition of Jean Coutu as we believe it will give additional stability in Metro’s business model. Plus, the company has the possibility of unlocking values to shareholders by spinning-off its real estate business. Metro is well established in two provinces with strong economies; Quebec and Ontario. Metro is also pushing its online services to gain additional customers.

Magna International (MG.TO / MGA)

Magna International is more than an international automobile part supplier; it also designs, develops, manufactures, assembles and engineers automobile parts. Magna sells to OEMs (original equipment manufacturers) across 26 countries. It offers a wide variety of 86 products that go from seating to roofing systems.

Source: MG Q3 2018 investors presentation

MG is a leader in the auto parts industry and this serves it well as many manufacturers tend to concentrate their processes with fewer suppliers, offering wider product ranges. This is exactly where Magna stands in the market. While MG relies on Detroit automakers for about 50% of its sales, the overall automobile business is looking brighter. Magna has done several partnerships with European manufacturers. Finally, there is a high switching cost for automakers to change manufacturers such as Magna. This makes its niche a highly repetitive and stable market.

Intertape Polymer (ITP.TO)

Intertape Polymer Group manufactures and sells a variety of paper and film-based pressure-sensitive and water-activated tapes, polyethylene and specialized polyolefin films, woven coated fabrics and complementary packaging systems for industrial and retail use.

Source: August ITP investors presentation

With the rise of online shopping, the packaging industry should benefit from this tailwind. ITP expects to reach $1.5 billion in sales by 2022. Intertape is #1 and #2 in its main market in North America and shows international expansion opportunities. Management also expects to grow by acquisition to expand its current line of products, consolidate its activities, and open additional doors in international markets.

Andrew Peller (ADW.A.TO)

Andrew Peller owns wineries in British Columbia, Ontario and Nova Scotia. The company is definitely part of my favorite consumer defensive stocks on the Canadian market. ADW not only produces its own wine, but also markets it along with other products. It owns several brands like Peller Estates, Trius, Hillebrand, Thirty Bench, Sandhill, Copper Moon, Kalona Vineyards Artist Series VQA wines and Red Rooster. Currently it has an estimated 14% share of its total wine market and a 37% share of domestic wines.

Andrew Peller is known to grow its revenues through acquisitions. Since 1995, management invested over $114M to purchase 14 vineyards. The company built a solid relationship with provincial liquor stores, but also maintained company-owned retail stores in Ontario. In late 2017, it acquired 100% of three estate wineries located in British Columbia’s Okanagan Valley. ADW used $79M from its credit facility to complete those acquisitions.

Alimentation Couche-Tard (ATD.B.TO)

Alimentation Couche-Tard is the largest convenience store operator in Canada and 2nd largest in North America. While constantly expanding its presence in the US and Europe, it successfully built a convenience store including daily use products. Many stores are also combined with fuel service stations. ATD operates 12,081 stores (7,863 in North America, 2,708 in Europe and 1,510 internationally). Instead of simply selling chips and beers, ATD focuses on a superior offer including fresh food, private labels and strong product concept offerings.

Source: Alimentation Couche-Tard 2018 investors presentation

An investment in ATD is definitely not for an income producing stock. However, if you are looking at the long-term horizon, your dividend payouts will grow in the double digits for a while and you will enjoy a strong stock price growth. ATD potential is directly linked to its capacity to swallow and integrate more convenience stores. ATD shows a perfect combination of the dividend triangle: revenue, EPS and dividend strong growth.

This list includes many low yielders. How can I build my retirement income with them?

If producing income with your portfolio is your priority, this article probably left you empty handed (besides ITP.TO). Unfortunately, there is a price to pay for quality and the first indication is often a low yield. It has become more complicated to identify safe high yielders. If you are looking for them, you might want to take a look at my latest articles covering 5 stocks with 5%+ yield.

Also, keep in mind that low yielding stocks often offer high growth potential. Take a look at the following graph and you will notice how the four low yield stocks mentioned in this article crushed the TSX in the past five years:

Source: Ycharts

How’s waiting working for you?

Investing when the market is high is not a simple task. You may think you found the right company, but the stock is clearly overvalued. Therefore, you wait until the market offers you an opportunity.

Last year, I didn’t hesitate to invest over $100K in the market. I did it while the market was at an all-time high.

I didn’t blink. I didn’t flinch. Do you know why? Because I know something. A truth. The simple truth of investing: Five years from now, those companies will trade at a higher price.

I’d like to tell you more about my investing methodology by sharing with you my top five stocks to hold for the next five years. Therefore, you won’t have to wonder if they will drop in the next six months – you will lock them in for a long period of time. Join me at my webinar and I’ll share not only five US dividend stocks I like, but five Canadian ones, too!

Click here to register to the webinar (email required)

Disclaimer: We are long all of the above.

What The Last 5 Years Taught Me About Investing

Blog, Investing Strategy

I didn’t know it back then, but 2013 was a crucial year in my life. At that time, I had been the happy owner of The Dividend Guy blog for the prior 3 years (I bought it in 2010). While I was building my online business, I was also managing a portfolio worth over $100M for my wealthy clients. I remember that back then, many of my clients were nervous about the stock market. The 2008 crash was very fresh in their memories and we were already talking about Greece’s debt problem and a potential Euro Zone explosion. I kept telling them that it was a good time to invest in the market. Not because I wanted to make more money on their backs, but because it was true. I was investing all my money in the market myself. When I look back on this period of my life, I realize that I’ve learned a lot about investing.

Today is always the right day to invest – but have a plan

Back in 2013-2014, many experts agreed that it was probably the worst time to invest in the stock market. I went back in time and found those marvels:

“Of course, with stocks at all-time highs, some seem to have nowhere to go but down.”

~Business Insider

“At ValuEngine.com we show that 77.8% of all stocks are overvalued, 45.2% by 20% or more. All 16 sectors are overvalued; consumer staples by 17.6%, retail-wholesale by 26.4% and utilities by 9.8%.”

~ Forbes

“The market has jumped nearly 30%. This means the stock market’s rally has been based solely on people paying more money for the same amount of earnings — this is known as “P/E multiple expansion.”

~ Motley Fool.

At that same time, I bought 3 of the best performing stocks in my portfolio: Apple (AAPL), Disney (DIS) and Lockheed Martin (LMT). Please note that while AAPL was in a slump, DIS and LMT were trading at their 52-week high. Yet, “today” was still the right day to buy them:

Source: Ycharts

It’s a blessing that I kept investing, right? But I didn’t do it without a plan. I didn’t pull out the newspaper and pick a few companies off of the “favorite editor’s picks” list. I’ve built a complete and proven investment process based on academic studies and my personal experience.

As a private banker, I had access to tons of studies and I called on some of the finest brains in the industry to validate my theories. This is how I invested my money with confidence. Last year, I disclosed my personal return and proved that I beat the market between 2012 and 2017. My latest income report also shows that I’m on the right track to beat the market once again in 2018. I have had similar results with my portfolio models at Dividend Stocks Rock too.

There is no magic in my returns. I’m not a genius. I’m not a guru. I’m just a serious investor with a solid plan. The longer you wait, the more you leave money on the table. All stocks are on sale today; you just have to wait 10 years to realize it.

Dividend cuts happen even during bull market – make sure you don’t suffer

When we ride a bull market, it seems that bad news doesn’t hit the front page that often. You might think that since 2013, dividend cuts have been rare. Which kind of companies would fail their shareholders when:

Unemployment keeps reaching new lows,

Interest rates offer cheap loans,

The economy keeps growing,

Companies keep beating analysts’ estimates,

The government lowers taxes,

Etc.

Well it happens more often than we like to pretend. The last 5 years haven’t been a walk in the park for everybody. The oil industry was greatly affected by the plunge of the oil barrel prices due to overproduction. 2014-2016 has been a dark time for many Canadian Oilsands companies:

Source: Ycharts

The energy sector isn’t the only industry that suffered many dividend cuts. More recently, we had giants such as General Electric (GE), Owens & Minor (OMI) and Anheuser-Busch Inbev (BUD) cutting down their distributions.

The last 5 years taught me that no company is solid enough to avoid dividend cuts. Investors must track their holdings on a quarterly basis and make sure their investment thesis remains valid. If you have doubts; don’t wait and get rid of the rotten apples.

2013 – a turning point in my life

At the beginning of this article, I told you that 2013 was one of the most important years of my life. But that wasn’t because I had a great career in the private banking industry or because I built a successful blog. 2013 was the year I built Dividend Stocks Rock; my dividend investing platform.

Since the platform was a success, this service enabled me to take a sabbatical year in 2016 to travel the world for twelve months. I grew my business during that year and I was also able to quit my day job when I came back in 2017. It’s been a little over a year that I’ve been living my dream life as I help other investors learning the ropes of building a strong dividend growth portfolio generating safe revenues.

The reason my investing strategy works, the reason why DSR works for others is because I apply a simply, yet efficient, set of rules. I don’t overthink, I don’t change my plan, I don’t permit guesses. DSR has been built on the very same foundation I use to manage my portfolio. As a result, I invested the totality of the commuted value of my pension plan ($108K in 2017) using exclusively DSR tools.

Two companies to hold for the next 5 years

Keeping both lessons in mind, I’d like to leave you with two great companies that may or may not seem overvalued right now, but will definitely be  trading at a higher price 5 years from now. I’m fairly confident both companies won’t cut their dividends during that time and are most likely going to hike their payouts each year going forward.

You can download my analysis of Microsoft (MSFT) and Nutrien (NTR.TO).

Video of the Week: DSR is Turning 5!

Blog, Investing Strategy, Personal Update


Again, this week’s video is not a regular stock pick and I’ve got a pretty good reason for it! My baby, Dividend Stocks Rock, will turn five in a couple days! This video explains why I created this website and how I think it helps investors finding rock solid dividend growth stocks. It is also a big thank you to those who have been following me all these years, either here or on DSR! There will be more to come, I promise. 😉

Video

If you enjoy the videos format and want more of them, subscribe to my YouTube channel!

Verbatim

00:01 Mike Heroux: Hey fellow investors, this is Mike Heroux from Dividend Stocks Rock, I hope you’re doing well today ’cause I am doing amazing. I am super proud to value tell you DSR will turn five years old on December 9th. Yeah, it’s been five years that Dividends Stock Rock has been helping thousands of investors. It’s a big milestone, because most businesses don’t even survive those five years, the first five years of its very existence, and DSR did not only survive, but thrive through it. And then, our membership has grown and improved through time, and now we’re serving over 1000 members. It’s been a big deal.

00:47 MH: So back in 2013, I was in Saint Louis with one of my friends, my partner, actually, in this adventure. And we were attending FinCon, which is a financial blogging conference where bloggers and media meet, exchange marketing and content strategy to improve their blogs, to improve their business. And between two conferences, I received an email from Jeremy, the former author of The Dividend Guy Blog, the blog that we purchased in 2010. And the guy has built a great website with a great infrastructure, but just didn’t have time to make it a business. That was the beginning of Dividend Stocks Rock. So he sent us an email asking if we were willing to buy the infrastructure and build the membership, finish his work, basically. Start from scratch, but with a solid foundation, and then help investors building their own investment thesis, their own investment process and finding quality dividend-paying stocks.

01:50 MH: So a few months later, on Halloween’s Day, on October 31st, we built our portfolio models and we started tracking them. I’m very proud to say that, in the past five years, none of our Dividend Stocks Rock portfolios has shown a dividend cut. All our companies actually increased their dividend year after year. And this is because we have a strong investment process behind it, we keep track of everything, we update those portfolios on a quarterly basis, and this probably explains a lot of our success. On December 9th, 2013, we opened the doors to the public, so it was the first time that members could actually pay us to receive our financial newsletters, look at our portfolios, and get our stock reports. I was quite anxious about it, because I’ve been blogging since 2006, and I had my share of success, but also of failures, and I was not sure if my readers were ready to pay for a membership website. But the answer was great, and it was anonymous, people loved it, and I still have lots of members that are with us today, five years later. So that’s a huge proof of trust and success, and I’m very proud of that.

03:13 MH: So now, DSR is not only a membership website helping investors throughout their investing journey, it’s more like a place where you can learn how to fish, ’cause I’m not the next stock picking guru, I’m not the next Warren Buffett. My goal is to teach you how to fish, teach you how to build your own investment thesis, your own investing process, and select the dividend stocks that you want in your portfolio with great success, while you can avoid dividend cuts as well. Throughout the years, DSR has evolved a lot more than portfolio models and a weekly newsletter. We now have over 300 stock cards that are being updated twice a year. We offer customized reports. We track over 1000 dividend-paying stocks on both Canadian and US markets, which is quite rare in the industry. We have done over 50 webinars in the past 12 months, and DSR have not only helped thousands of members to invest their money, it also helped me to build my dream life.

04:22 MH: In 2016, I was able to take a sabbatical year, use DSR as my main source of income, and I travelled the world for one year with my family. My three children, my wife and I, we were in a small RV, and we drove across Canada and then the United States, and then all the small countries in Central America, to end up in Costa Rica for three months. We enjoyed that so much, that when I came back, I decided to quit my job as a private banker, that kind of job that is prestigious with a full pension plan, good pay job, good paycheck. But I was only able to help 300 to 400 clients a year with this job, and I really wanted to reach thousands of investors. This is why I decided to quit, and then to put all my energy, all my passion into DSR. So 12 months later, 2018, we’re celebrating our fifth anniversary, and I just want to tell you that I am grateful for you being a reader, a follower, maybe a member. So I wanna thank you for being there, for watching my videos, watching my webinars, reading my stock reports, supporting me by commenting on Twitter or on YouTube.

05:45 MH: Just wanna tell you that I’m grateful, and I do that because I’m passionate about the stock market, and I’m so glad that I get to meet all those investors like you. So thank you for being there for those past five years, and I just can’t imagine where DSR will be five years down the road, in 2023, actually, that would be crazy. And I just hope that, at that time, I’ll have a full office with 20 employees, and we’re going to be able, not to help thousands of investors, but tens of thousands. So thank you again and keep following me. I’ll keep giving you as much value as I can, ’cause I really like dividend-paying stocks, and I think that we can all be successful on this investment journey. Cheers.

Top 5%+ Juicy Canadian Dividend Stocks

Best Dividend stocks, Blog, Canadian Dividend Stocks, Investing Strategy, Retirement


Yesterday, I’ve made my list of my favorite 5%+ yielder on the U.S. market.  Finding solid companies paying high yields is a very difficult task. Many investors think they can simply pull out a filter including a 5 year history and some more metrics and they can build their portfolio by picking any stocks in this basket. This sounds a lot like the perfect recipe to suffer from dividend cuts in a few years from now!

Since I started Dividend Stocks Rock 5 years ago, I haven’t suffered a single dividend cut. This is mostly because I follow a strict investment process and follow each company quarterly. The following are examples of companies that meet my retirement rules.

Inter Pipeline (IPL.TO)

Inter Pipeline Ltd. is an energy infrastructure business engaged in the transportation, processing, and storage of energy products across western Canada and Europe. IPL is among the rare companies making our list of the top dividend energy stocks. The company operates four distinct business segments: Oil Sands Transportation, consisting of three pipeline systems; NGL Processing, including both natural gas and off-gas processing facilities; Conventional Oil Pipelines, consisting of 3,900 km of pipeline across three systems; and Bulk Liquid Storage.

Inter Pipeline (IPL.TO)

Source: IPL Q3 2018 fact sheet

IPL stock has been down most of 2018. This is the case with many pipeline companies. However, you can see that it’s a “sector thing” as IPL just closed a record year with double-digit FFO increase for the year. Management increased its dividend significantly and still shows an FFO payout ratio well under control.

Polaris Infrastructure (PIF.TO)

Polaris Infrastructure Inc is a renewable energy company. It is engaged in the operation, acquisition, and development of renewable energy projects in Latin America. In fact, Polaris owns and operates San Jacinto Geothermal power plant in Nicaragua. PIF has a contractual price per MWh (Power Purchase Agreement or PPA) with the government including annual escalator through 2029. Management recently announced the acquisition of Union Energy Group Corp. This transaction will open the door for many hydro electric projects in Peru and will help PIF to diversify its business model.

Polaris Infrastructure (PIF.TO)

Source: PIF October presentation

The investment thesis around Polaris Infrastructure is a risky play that could pay off a lot. While management has proven its ability to increase its revenue and cash flow consistently since 2014, the stock plunged severely in 2018. This all happened because of the violence in Nicaragua. PIF shows a solid contract and great execution providing increasing cash flow and allowing management to pay off debts. Geothermal energy is part of the future for many countries, and it is a reliable & green source of power. Unfortunately, political instability gathers all the attention. If you are willing to take the bet, PIF could definitely make you richer. While there is a problem with the current president, Nicaragua shows the strongest GDP growth in Central America. Now that the company has found another growth vector in Peru. We think PIF will be a solid investment in the Utility sector.

Enbridge (ENB.TO)

Enbridge owns and operate an impressive network of liquid (OIL) and natural gas pipelines. ENB is able to transport energy from coast to coast, from north to south. ENB shows about 96% of its business done through “take-or-pay” contracts. The pipeline is like a toll on a highway; people pay for each use and the company piles-up the cash.

Enbridge (ENB.TO)

Source: ENB Q3 2018 presentation

Companies do not pay a high yield for no reason. ENB raised its debts and number of shares with the merger of Spectra. As pipelines require lots of capital to build and maintain, Enbridge may find itself in a position where cash is missing. After all, management has plenty of projects to fund, a double-digit dividend growth promise to keep and larger debts to repay. There is always a possibility where this scenario turns bad.

Enbridge clients enter into 20-25-year transportation contracts. The company is already well positioned to benefit from the Canadian oil sands (as its Mainline covers 70% of Canada’s pipeline network). Now that is has merged with Spectra, about a third of its business model will come from natural gas transportation. The company has a handful of projects on the table or in development. Among those projects is the Line 3 replacement. The company expects the completion of this project in mid-2019.

Emera (EMA.TO)

Emera is an energy and service company. Emera’s main market is Nova Scotia as it owns Nova Scotia Power, the province’s main electricity provider. Emera owns power plants and distributes natural gas in Canada, the USA and the Caribbean. This utility employs over 7,000 workers and serves more than 2.5 million customers. Tampa Electric (41%), NSPI (14%) and Maritime Link (11%) generate most of EMA’s earnings.

Emera (EMA.TO)

Source: EMA Q3 2018 investors presentation

Emera has been increasing its dividend payment each year for over a decade now. With the purchase of TECO energy, management intends to continue its tradition. The company forecasts a 4-5% dividend growth rate throughout 2020 while targeting a payout ratio of 70-75% (Emera Investors Presentation). At 5%+ dividend yield, this is a keeper for several years.

Emera is a very interesting utility with a solid core business established on both sides of the border. EMA now shows $28 billion in assets and will generate revenues of about $6.3 billion. It is well established in Nova Scotia, Florida and four Caribbean countries. This utility counts on several “green projects” with hydroelectricity and solar plants. This decreases the risk of future regulations affecting its business as the world is slowly moving toward greener energy.

BCE (BCE.TO)

BCE is the largest Canadian telecom by market cap, about twice the size of Telus. It shows the most balanced business model among this small group. BCE has shown a very solid dividend profile for several years and my analysis proves it will continue to rise in the future. All BCE services are based on some sort of monthly subscription generating a consistent base for cash flow.

BCE (BCE.TO)

Source: BCE investors fact sheet

BCE debt level is not be underestimated. BCE is a giant… with a giants debt. This is not a perfect situation as interest rates are now rising. And, as the Canadian Government keeps pushing for more competition in the wireless industry, BCE may see additional competitors adding more pressure on margins in the future.

When you have the opportunity to invest in a strong yielder like BCE, and still hope for a small stock appreciation growth, you must take a hold of it. BCE shows a well-diversified business model and will continue to generate strong cash flow in the future. The company is a real money printing machine. As BCE is part of an oligopoly (Telus, Rogers and BCE controls about 90% of wireless market), there is limited competition and high barriers to entry. Since BCE offers a wide array of products, it can increase revenue generated by each customer.

Final Thought

Most of those companies have been selected in our 100% Canadian retirement portfolio. You can learn more about how we created safe portfolios generating 4-5% yield each year (and growing their dividend!). I’ve recently hosted a free webinar on this topic and you can now watch the free replay here:

Click here to watch the webinar replay

(must enter your email to register).

Disclaimer: We hold IPL, PIF, ENB, EMA and BCE in our portfolios.

 

Featured Image Source: Pixabay

My Favorite 5 Stocks Paying a Juicy Yield Over 5%

Best Dividend stocks, Blog, Investing Strategy, Retirement

Each year, they would receive juicy dividends, see their payments increasing and their portfolio growing in value. Wow! This really looks like buying a seafront house in Hawaii for $200K, doesn’t it? Unfortunately, however, many 5% yielders end-up cutting their dividend.

A 5% yield is only good if it keeps getting paid

Over the past few weeks, investors got hit by dividend cuts coming from well-known businesses. As I’ve highlighted last week in this article, large caps, dividend achievers and popular dividend paying stocks have  their shareholders recently:

  • General Electric (GE) destroyed 92% of its dividend payment;
  • Owens & Minor (OMI) went for a 71% axe swing at its dividend;
  • Anheuser-Busch InBev (BUD) killed 50% of its dividend;
  • And Buckeye Partners (BPL) crushed its dividend by 41%.

So much for those who thought high yielders were safe, right? At the same time, it would be a false assumption of thinking that all high yield stocks would end up with a similar fate. If you follow strict investing rules, you may find those hidden gems that keep rewarding their shareholders with generous payments. I wanted to help you out through your research by sharing my (rare) favorite stocks showing a 5%+ yield.

My favorite 5 stocks paying over 5% yield

Five years ago, I started my investing platform, Dividend Stocks Rock. I’ve built and improve this service to become one of the most efficient tools to find dividend growing companies. For several years, I was reluctant to pick high yielding stocks. However, through additional research and by applying my 7 investing rules, I was able to find a few hidden gems. As I will celebrate Dividend Stocks Rock’s 5th anniversary in December, I thought of picking 5 Stocks with a 5%+ yield. Yield posted is as  of November 7th.

Blackstone (BX) 6.88% yield

Blackstone is an asset manager with $456 billion in assets under management (AUM) that comes from private equity, real estate funds, hedge funds, and credit funds. BX doesn’t invest in the stock market but developed a strong expertise in alternative assets investing in the past 30 years. BX receives money from institutional clients or wealthy families and invests it as a general partner in the mentioned asset classes.

Blackstone (BX)

Source:  BX Q3 2018

Blackstone is a complex beast. BX could look like another asset manager offering a generous dividend yield to shareholders. However, it is more complicated than that. Since Blackstone keeps a cut of the profit realized on its investment, both revenues and earnings go up and down from one quarter to the other. Moreover, the strong dividend payment is also based on performance. Still, the company shows steady assets under management growth and benefits from its good reputation.

W. P. Carey (WPC) 6.25% yield

Founded in 1973, W.P. Carey is one of the largest diversified net lease REITs. WPC operates as a self-managed diversified real estate investment trust. The company owns and manages commercial real estate which is leased to companies on a long-term basis. The REIT manages 1,186 properties covering approximately 133 million square feet as of September 30, 2018 (including the merger with CPA:17). Its portfolio is located primarily in North America, Northern and Western Europe and is well-diversified by tenant, property type, geographic location and tenant industry.

W. P. Carey (WPC)

Source: Q3 investors presentation

WPC is a long lasting and well managed REIT offering a great solution with a solid yield and decent dividend growth perspectives for income seeking investors. WPC shows an impressive occupancy rate (around 99%) and a top 10 tenants concentration of 32%. WPC shows a great business model with diversified sources of income. WPC counts roughly 30% of its revenue coming from Europe. Considering the recent acquisition, WP is now a serious candidate for any retirement portfolio. The dividend will continue to keep up with inflation and shows a 6% yield. Finally, WPC is part of the dividend achievers list.

EPR Properties (EPR) 6.05% yield

EPR specializes in Triple Net Leases. This is when the tenant agrees to pay all real estate taxes, building insurance, and maintenance in addition to normal fees expected under the agreement (rent, utilities, etc.). EPR shows nearly 400 locations rented by over 250 tenants for a total asset book value of nearly $7 billion. EPR’s main business is focused on entertainment (158 megaplex theatres, 11 family entertainment centers), recreation (32 golf complexes, 12 ski areas, 21 attractions) and education (63 public schools, 14 private schools and 69 early childhood education centers).

EPR Properties (EPR)

Source: EPR investors presentation

EPR has a strong business model in a growing industry (entertainment). It will do well as the economy continues to grow. With the recent stock price drop (high of $84 back in 2016), this is a good opportunity to buy a high yielding REIT paying monthly dividends. EPR still shows an appetite for growth in the upcoming years and should benefit from the current economic tailwind well into the future. Management expects FFO/share of $5.75-$5.90 while paying $4.32 in dividend for 2018. The distribution is safe, sleep well.

Hannon Armstrong (HASI) 5.74% yield

HASI provides capital and services focused on reducing climate changing greenhouse gas emissions (“GHG” or carbon emissions) as well as mitigating the impact of, or increasing resiliency to, climate change. It focuses primarily on energy efficiency, renewable energy, and other sustainable infrastructure markets. HASI shows about 175 investments and managed $4.8 billion worth of assets. It expects to invest around $1billion per year going forward. Its portfolio shows 47% of investment in solar, 26% in wind, 22% in efficiency and 5% in sustainable infrastructure.

Hannon Armstrong (HASI)

Source: HASI investors presentation Nov 2018

It’s hard not to invest in a 6-7% yielder that believes in renewable energy. HASI shows confidence in its business model and is ready to invest about $1 billion each year to grow. We have clearly seen a trend towards  solar and wind energy recently, and as oil prices pick up, you can expect the trend to continue to go stronger. Going forward, investors should expect a dividend policy matching inflation (2-3%). This is more than enough to beat inflation while enjoying a high yield.

Lazard (LAZ) 4.14% yield, 7.25% with special dividend

Lazard, together with its subsidiaries, operates worldwide as a financial advisory and asset management firm. The financial advisory segment offers services regarding mergers and acquisitions, strategic advisory matters, etc. LAZ was founded in 1840 and manages over $189B. It is well known for its experience in asset management and in M&A.

Lazard (LAZ)

Source: LAZ investors presentation

Lazard’s power resides in its quality advisory segment. LAZ is surfing on the current market tailwind in the M&A activities, while gaining market shares. LAZ has also developed a strong expertise in real asset management, which is gaining popularity among investors. Paying fees to have Lazard managing your money seems justified. Strong from its presence in 170 countries, Lazard aims to expand across the world. In late months, LAZ acquired a banking boutique in Canada in 2016 and opened a new office in Mexico in 2017. It has also built a strong brand in China for the past decade. The company has been beating down on the market recently creating a great opportunity. While the dividend yield is currently over 7%, it includes a special dividend. Management has started the tradition of rewarding shareholders in February with extra cash flow distribution for the past 4 consecutive years.

Tomorrow, I go Canadian!

Since I’m Canadian and I know lots of my readers are following this market, I’ll do the same exercise for Canadian stocks, stay tuned!

 

Featured Image Source: Pixabay