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Dividend Investors: Is Altagas Ltd. or Inter Pipeline Ltd. a Better Pick Today?

The pullback in dividend stocks is giving income investors an opportunity to scoop up some quality names at reasonable prices.

Let’s take a look at Altagas Ltd. (TSX:ALA) and Inter Pipeline Ltd. (TSX:IPL) to see if one is more attractive right now.


Altagas owns energy infrastructure in Canada and the United States. The appeal of this stock lies in its diversified revenue stream, both by geography and by business segment.

The company’s assets are roughly split 50/50 between Canada and the U.S., giving Canadian investors a chance to get some U.S. exposure without having to go through the hassle of buying American stocks.

Altagas also provides a nice balance across sectors with power, gas, and utility businesses.

This helped the company deliver solid Q3 2016 results. Normalized EBITDA jumped 41% year over year, and funds from operations (FFO) increased to $0.84 per share from $0.75 per share in Q3 2015.

Altagas grows through a nice mix of organic development and strategic acquisitions.

Of note right now is the company’s Townsend gas-processing facility, which began commercial operations in Q3 and should see an expansion come online near the end of next year.

The North Pine NGL project is also worth watching with an expected start date in the first half of 2018.

These new assets should boost cash flow and help support further dividend growth.

Altagas recently raised its monthly payout to $0.175 per share. That’s good for a yield of 6.5%.

Inter Pipeline

Inter Pipeline also has a diversified portfolio of assets. The company operates natural gas liquids (NGL) extraction facilities, oil sands pipelines, conventional oil pipelines, and a European liquids storage business.

The balanced revenue base has helped the company navigate the oil rout reasonably well, and management is taking advantage of the tough times to invest for the future.

Inter Pipeline recently closed its $1.35 billion purchase of two NGL extraction plants and related infrastructure from The Williams Companies. The assets were purchased at a very attractive price and should generate strong returns once the market recovers.

The company just increased its monthly dividend to $0.135 per share. Investors who buy now will pick up a yield just shy of 6%.

Is one a better bet?

Both companies are attractive income picks with reliable distributions that should grow as new assets boost cash flow.

At the moment, I would give Altagas the advantage for the higher yield and strong exposure to the United States.

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Fool contributor Andrew Walker has no position in any stocks mentioned. Altagas is a recommendation of Stock Advisor Canada.

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