High-Yield Investors: 2 Monthly Income Stocks Paying 6.5-7%

Retirees and other income investors are searching for dividend stocks that offer reliable payouts and above-average yields.

Let’s take a look at Inter Pipeline Ltd. (TSX:IPL) and Altagas Ltd. (TSX:ALA) to see why they might be interesting picks.


IPL owns natural gas liquids (NGL) extraction assets, conventional oil pipelines, oil sands pipelines, and a liquids storage business in Europe.

The company has managed to navigate through the storm in the energy market in pretty good shape, and management has even taken advantage of the tough times to add strategic assets to fuel future growth.

For example, IPL purchased two NGL extraction sites from The Williams Companies last year at a significant discount to the cost of building the facilities.

IPL reported record net income for Q1 2017 and has continued to raise the dividend through the downturn.

The payout ratio in the first quarter was 61%, so the distribution should be safe, even if the oil patch continues to struggle.

At the time of writing, the annualized yield on the monthly payout of 13.5 cents per share is 6.5%.


Altagas operates gas, utility, and power businesses in Canada and the United States.

The company continues to grow across the business segments, including the addition of a battery storage facility in California late last year.

Altagas is also pursuing new NGL developments in British Columbia with the expansion of its Townsend gas-processing facilities and the construction of a propane export terminal.

In addition, the company is in the process of acquiring Washington D.C.-based WGL Holdings for $8.4 billion.

As the new assets generate additional revenue, management expects cash flow to rise enough to support annual dividend growth of at least 8% through 2021.

The stock has come under pressure amid general weakness in the broader energy sector and some negative views on the WGL deal. At the time of writing, investors can pick up a 7% annualized yield.

Is one more attractive?

Both stocks offer distributions that should be safe, although Altagas probably carries more risk until the WGL deal closes next year.

If you want a more conservative pick, go with IPL. If you like the idea of having U.S. exposure and want the highest yield, Altagas is the better choice.

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Fool contributor Andrew Walker owns shares of Altagas. Altagas is a recommendation of Stock Advisor Canada.

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