Investors used to get decent yields from GICs and savings accounts, but those days are long gone and unlikely to return anytime soon.
As a result, income seekers are turning to dividend stocks to supplement their pensions or paycheques.
Inter Pipeline doesn’t get as much attention as some of its larger peers in the pipeline sector, but the company offers investors a premium dividend yield supported by a nice mix of niche-focused assets.
The business has weathered the oil rout very well, and management has made strategic investments along the way that should deliver strong cash flow growth in the coming years.
Inter Pipeline recently closed its purchase of two natural gas extraction (NGL) facilities from The Williams Companies for $1.35 billion. Williams unloaded the plants at a discounted price, so Inter Pipeline stands to see strong returns on the investment when the market recovers.
The deal also comes with a planned $1.85 billion propane dehydrogenation project that just received a $200 million royalty credit from Alberta. If all goes well, the plant will be up and running by the end of 2021.
Inter Pipeline has additional projects in the planning stage, including a $1.3 billion polypropylene facility.
Dividend growth remains steady, and that should continue as the new assets are completed and begin generating revenue.
Inter Pipeline pays a monthly distribution of $0.135 per share for an annualized yield of 5.7%.
BCE is a dominant force in the Canadian communications industry with assets spanning the spectrum of the sector.
The company is in the process of further cementing its position via the purchase of Manitoba Telecom Services. BCE also bought out its partners in Q9 Networks in 2016.
In addition, the company has moved into the media space in recent years and now owns a television network, specialty channels, radio stations, and sports teams.
When you combine these assets with the state-of-the-art wireless and wireline networks, you get a powerful business that connects with most Canadians on a weekly, if not daily, basis.
Think about it.
Every time someone in this country calls a friend, sends a text, listens to the weather report, watches the news, downloads a movie, or check their e-mail, the odds are pretty good that a BCE asset is involved somewhere along the line.
The stock has pulled back a bit from the 2016, making it slightly less expensive. BCE still isn’t cheap, but income investors can rely on the rock-solid dividend that now yields 4.7%.
The best move?
Inter Pipeline pays monthly and offers a nice shot at some upside in the stock price once the energy sector recovers. BCE provides stable payouts and a stock that normally holds up well when the broader market hits a speed bump.
An equal investment in both stocks would give an average yield of 5.2%. That’s not a bad starting point for a high-yield income portfolio.
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Fool contributor Andrew Walker has no position in any stocks mentioned.