Canadian retirees are searching for quality income stocks to help supplement their pensions.
Let’s take a look at why Inter Pipeline Ltd. (TSX:IPL) and Altagas Ltd. (TSX:ALA) deserve a closer look.
Inter Pipeline
Inter Pipeline owns natural gas liquids (NGL) extraction facilities, oil sands pipelines, conventional oil pipelines, and a Europe-based liquids storage business.
The diverse revenue stream has helped the company battle its way through the oil crisis, and management has taken advantage of the downturn to position the company for future growth.
Inter Pipeline recently closed a $1.35 billion deal to acquire two NGL extraction facilities and related infrastructure from The Williams Companies. Williams unloaded the assets at a huge discount to the construction costs, so Inter Pipeline is should be looking at some sweet returns on the investment when the market recovers.
The company also just received news it will receive $200 million in royalty credits from the Government of Alberta for its planned $1.85 billion propane dehydrogenation facility, which came as part of the Williams deal.
Inter Pipeline is also running the numbers on the commercial viability of an additional $1.3 billion facility that would convert propylene into polypropylene.
If all goes well, both projects could be operational in 2021.
Inter Pipeline pays a monthly dividend of $0.135 per share. That’s good for a yield of 5.9% at the current stock price.
Altagas
Altagas has a balanced portfolio of assets including utilities, power-generation projects, and gas infrastructure located in Canada and the United States. The assets are roughly split 50/50 between the two countries, so investors can use Altagas as a way to add some U.S. exposure to their portfolios.
The company recently began commercial operations at its Townsend gas-processing plant, and an expansion at the facility should be online by the end of 2017.
Altagas is also making good progress on its North Pine NGL project, which should begin operations in 2018.
Additional cash flow from these assets should support dividend growth in the coming years. The company recently bumped up its monthly payout to $0.175 per share, which now provides a 6.5% yield.
Is one more attractive?
Both stocks are attractive income picks with safe distributions that should grow as new assets come online.
Inter Pipeline has some big projects in the works that could boost cash flow significantly in the coming years if they get the green light. At this point, however, I would probably go with Altagas as the first choice due to the higher yield and near-term addition of new assets.
