Income Investors: This Monthly-Dividend Stock Yields 6.3%

Here’s why Veresen Inc. (TSX:VSN) might be worth a look right now.

| More on:
pipeline
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Income investors are searching for alternatives to boost the yield on their savings. One popular way to achieve this goal is to own dividend stocks.

Let’s take a look at Veresen Inc. (TSX:VSN) to see if it deserves to be in your portfolio today.

Operations

Veresen is an energy infrastructure player with operations in the pipeline and midstream segments.

The company recently announced the sale of its power generation assets.

The pipeline business primarily consists of interests in two systems, including the 3,000 km Alliance Pipeline that delivers natural gas and gas liquids to the Midwest United States, and the Ruby Pipeline that carries natural gas in Wyoming and Oregon.

The midstream assets include an interest in the Aux Sable natural gas liquids (NGL) fractionation facility and NGL storage and distribution facilities. Veresen also has a 50% position in Veresen Midstream, which is focused on developing and owning infrastructure in top basins, such as the Montney region.

Financial results and strategy change

Veresen delivered solid results in 2016.

Full-year distributable cash came in at $356 million, or $1.14 per share, compared to $310 million, or $1.06 per share in 2015.

Adjusted net income for the year was the same as 2015, at $0.19 per share.

The company decided to exit the power business and recently secured deals totaling $1.18 billion for its gas-fired, renewable, and waste heat assets.

Veresen will use the proceeds of the sales, which are expected to close in Q2 2017, to fully fund the remaining equity requirement for $1.5 billion in development projects.

The move alleviates some balance sheet concerns and Veresen expects to see its debt to EBITDA drop from 5.7X to a range of 4-4.5X.

Dividends

Veresen pays a monthly dividend of 8.33 cents per share, which currently provides an annualized yield of 6.3%.

The company hasn’t raised the payout in a decade, but it also held it steady during the Great Recession, and through the downturn in the past two years.

Should you buy?

The company’s balance sheet issues should be sorted out and the dividend looks safe. Contrarian types who had the courage to buy at the lows last year are now sitting on some nice gains.

Investors probably won’t see dividend growth in the near-term, but the stock might be worth a look for those searching for above-average yield with distributions paid out on a monthly basis.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

More on Dividend Stocks

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Parents: Here’s Every Credit and Benefit You Can Claim From the CRA

Parents have it hard already, so make sure the CRA is doing everything for you by dishing out payments you're…

Read more »

edit Colleagues chat over ketchup chips
Dividend Stocks

3 Canadian Dividend Stocks to Buy and Hold for Life

These dividend-paying stocks have solid earnings base to support their payouts for decades.

Read more »

A golden egg in a nest
Dividend Stocks

Create a Million-Dollar TFSA With Just $1,000

If you have a TFSA, you can easily make a million-dollar portfolio by investing on a consistent basis in this…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

3 Canadian Stocks With Over 6% of Dividend Yield

Boost your passive income with three safe dividend stocks.

Read more »

TFSA and coins
Dividend Stocks

TFSA Pension: 2 TSX Dividend Stocks to Buy Now and Hold for Decades

These top TSX stocks pay great dividends and look cheap to buy right now for a TFSA retirement fund.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

TFSA Dividend Income: 2 TSX Stocks to Buy on the Pullback

These TSX stocks look oversold and pay attractive dividends that continue to grow.

Read more »

oil tank at night
Dividend Stocks

1 Top TSX Energy Stocks for Summer 2022

TSX energy stocks have tanked recently, but they could enjoy a nice summer rally. Here's one top stock I'm eyeing…

Read more »

TIMER SAYING TIME FOR ACTION
Dividend Stocks

Market Correction: 2 Cheap TSX Dividend Stocks to Buy Now for a Self-Directed RRSP

These top TSX dividend stocks look cheap right now for a self-directed RRSP focused on total returns.

Read more »