Yield Investors: 2 Monthly Income Stocks With Reliable 5% Distributions

Canadian income investors are searching for top-quality stocks to add to their portfolios.

Let’s take a look at RioCan Real Estate Investment Trust (TSX:REI.UN) and Inter Pipeline Ltd. (TSX:IPL) to see why they might be interesting picks today.


RioCan owns more than 300 retail centres across Canada and is the country’s largest REIT.

Most of the company’s anchor tenants are well-established brands in the grocery, pharmacy, discount goods, and homecare categories. These businesses tend to hold up well regardless of the state of the economy and are not at risk of being wiped out by internet shopping.

RioCan took a hit last year when Target Canada decided to close its doors, but the REIT has found new tenants that will actually pay more than Target was paying. That suggests demand remains strong for the company’s retail space.

Earlier this year RioCan sold off its 49 U.S. properties for net proceeds of $1.2 billion. Part of the funds have been used to reduce debt to the point where RioCan now has the lowest leverage in its history.

The remaining funds are being directed to growth opportunities, including a plan to build residential units at some of the company’s prime urban locations. If the idea takes off, RioCan could see a nice boost to cash flow in the coming years.

The company pays a monthly distribution of $0.1175 per unit. That’s good for a 5.3% yield at the current price.

Inter Pipeline

Inter Pipeline owns natural gas liquids (NGL) extraction assets, oil sands infrastructure, conventional oil pipelines, and a Europe-based liquids storage business.

The diversified revenue stream has helped the company navigate the oil rout relatively well, and management is taking advantage of the difficult market conditions to invest for the future.

Inter Pipeline recently closed its $1.35 billion acquisition of two NGL extraction plants and related infrastructure from The Williams Companies. The assets were purchased at a significant discount, so Inter Pipeline could see strong returns on the deal when market prices recover.

The stock pays a monthly dividend of $0.13 per share for a yield of 5.5%. Inter Pipeline raised the payout last November, and investors could see another hike in the coming months as the new assets are integrated into the portfolio.

Is one a better pick?

Both companies offer reliable monthly distributions.

If you only have the cash to buy one, I would probably go with Inter Pipeline as the first choice. The stock offers a slightly better yield, and investors could see some nice gains in the share price when energy markets recover.

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Fool contributor Andrew Walker has no position in any stocks mentioned.

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