Canadians are searching for top dividend stocks to buy inside their TFSA accounts.
Power Financial is a holding company with diversified Canadian financial assets as well as interests in some of Europe’s top companies.
In Canada, Power Financial has controlling positions in Great-West Lifeco and IGM Financial Inc.
Investors are concerned about the future of IGM’s mutual fund business, as well as Great West’s risks in Europe after the Brexit vote.
IGM is diversifying its offerings and now positions itself as a one-stop financial services shop, offering a wide variety of financial products and solutions to clients in addition to the mutual funds. While robo-advisors and ETFs threaten the old model, IGM continues to maintain significant assets under management (AUM). The company had AUM of $139.3 billion as of August 31–up from $133.4 billion at the same time last year.
Great West gets 40% of its net income from Europe, so there is reason to keep an eye how things pan out in the coming quarters, but the overall threat to Power Financial should be limited and the sell-off appears overdone.
The European holdings come from the company’s stake in Pargesa Holdings SA, which has interests in various sectors, including cement, oil and gas, and spirits. Names in the portfolio include global giants such as LafargeHolcim, Total, and Pernod Ricard.
Power Financial raised its dividend last year, so management isn’t overly concerned about the company’s income outlook. The current quarterly payout of $0.3925 per share yields 5.2%.
If you are looking for an alternative to the banks, Power Financial should be on your short list.
Altagas owns natural gas and electricity infrastructure in Canada and the United States.
The company has received a lot of attention over its decision to shelve its $600 million LNG development in British Columbia, but there is a lot more going on at the company.
Altagas generated normalized EBITDA of $153 million in Q2 2016. That’s 43% higher than the same period last year.
The growth comes as a result of the successful integration of new assets acquired in 2015. Management has a strong track record of finding strategic acquisitions that complement the existing portfolio, and that trend should continue.
Altagas recently raised its monthly payout to $0.175 per share. At the current price, investors can pick up a safe yield of 6.4%.
The stock has come down with the broader oil and gas sector, but there is strong upside potential in this name when investors decide to shift back into the energy space.
Is one a better buy?
Both stocks are attractive dividend holdings for a TFSA account.
Altagas provides a better yield today, and investors could see a nice rally when oil and gas recovers. As a result, I would go with the energy infrastructure company as my first pick.