As savvy income investors, we’re always on the lookout for high-quality stocks that can boost our portfolios’ returns.
Let’s take a closer look at why Corus Entertainment Inc. (TSX: CJR.B) and Ag Growth International Inc. (TSX: AFN) should be on your radar.
Corus Entertainment Inc.
Corus is one of the world’s leading media and content companies. Its portfolio includes 45 specialty television services, 39 radio stations, 15 conventional television stations, a global content business, digital assets, live events, children’s book publishing, animation software, technology, and media services. Its brands include Global Television, Disney Channel Canada, Nickelodeon Canada, Showcase, BBC Canada, Fresh Radio, Nelvana, Kids Can Press, and Quay Media Services.
Corus currently pays a monthly dividend of $0.095 per share, representing $1.14 per share on an annualized basis, and this gives its stock a very high yield of about 9.2% at today’s levels.
A yield over 9% may cause some investors to cast doubt on its stability, but Corus has the cash flow to back it up. In the first nine months of fiscal 2016, its free cash flow totaled $126.77 million and its dividend payments totaled just $77.57 million, resulting in a very conservative 61.2% payout ratio.
Corus also has an impressive track record of dividend growth. It has raised its annual dividend payment for 12 consecutive years, and its 7.7% hike in March 2015 has it on pace for 2016 to mark the 13th consecutive year with an increase.
I think Corus’s strong operational performance, its ample generation of free cash flow, and the continued financial benefits that will come from its integration of Shaw Media Inc., which it acquired on April 1 and is expected to provide a significant boost to its free cash flow over the long term, will allow its streak of annual dividend increases to continue for many years to come.
All in all, Corus is a free cash flow machine that offers a very high yield and dividend growth. What more could an income investor ask for?
Ag Growth International Inc.
Ag Growth International, or AGI for short, is one of the world’s leading manufacturers and distributors of portable and stationary grain handling, storage, and conditioning equipment. Its brands include Westfield, Batco, Wheatheart, TRAMCO, NuVision, REM, Grain Guard, Entringer, Westeel, and Twister.
AGI currently pays a monthly dividend of $0.20 per share, representing $2.40 per share on an annualized basis, which gives its stock a very high yield of about 5.4% today.
Like Corus, AGI’s cash flow supports its dividend. In the first half of 2016 its funds from operations (FFO) totaled $26.74 million and its dividend payments totaled just $17.59 million, resulting in a conservative 65.8% payout ratio.
AGI is also a very reliable income provider. It has maintained its current monthly dividend rate since November 2010, and I think its consistently strong FFO generation, the growing demand for its equipment, and its numerous acquisitions over the last year that will continue to provide significant contributions going forward will allow it to continue to do so for the foreseeable future.
Overall, AGI offers a high and reliable stream of monthly dividends, and it has the potential to grow its dividend in the years ahead, making it an ideal long-term investment for income investors.
