The rebound in the stock market has wiped out many of the juicy deals for income investors, but there are still a few picks out there with reliable and attractive yields.
Here are the reasons why I think income seekers should consider Inter Pipeline Ltd. (TSX:IPL) and RioCan Real Estate Investment Trust (TSX:REI.UN).
Inter Pipeline
Inter Pipeline is a unique beast in the Canadian energy sector.
The company transport 15% of western Canadian conventional oil output and 35% of the country’s oil sands production. In addition, Inter Pipeline owns a growing liquids storage business and a natural gas extraction operation.
Investors fled the stock last year assuming the oil rout would mean an end to growth, but the company is doing very well despite the tough times.
Funds from operations in Q4 2015 rose 32% compared with the same period the year before, and net income hit a record $138 million.
The oil sands segment is benefiting from two new pipelines that went into service in 2015. These assets helped boost Q4 funds from operations in the division by 62% year over year. The conventional oil segment also delivered strong results as growth in the Viking oil play offset a slowdown in other areas.
The storage business, which is based in Europe, is enjoying rising demand as utilization rates jumped from 84% in Q4 2014 to 97% in Q4 2015.
The natural gas extraction group had a rough 2015, but things started to turn around in Q4 with funds from operations coming in at $25 million, about on par with Q4 in the previous year.
Inter Pipeline raised its dividend by 6% in November. The monthly payout of 13 cents per share looks very safe and yields 5.8%.
RioCan
RioCan owns more than 300 shopping centres across Canada. Most of its top tenants are grocery stores, pharmacies, discount retailers, and businesses that sell everyday household goods.
These companies are big chains with strong brands, and they sell products that people need regardless of the state of the economy.
Demand remains strong for the company’s retail locations. RioCan renewed 4.6 million square feet of floor space in 2015 at an average rent increase of 8.1%. The company also managed to replace more than 100% of the income stream that was at risk when Target exited the Canadian market. Funds from operation in Q4 2015 rose 9.8% compared with the same period the previous year.
RioCan recently sold its 49 U.S. properties, and company is using the proceeds to reduce debt and invest in new growth opportunities.
The REIT pays a monthly distribution of 11.75 cents per share. That’s good for a 5.2% yield at the current price.
