Income investors are always searching for stocks with sustainable payouts.
Some companies pay their shareholders monthly, which is great for retirees who are looking for a steady stream of distributions to complement their pension income.
Let’s take a look at Shaw Communications Inc. (TSX: SJR.B)(NYSE: SJR), Keg Royalties Income Fund (TSX: KEG.UN), and Altagas Ltd. (TSX: ALA) to see why they might be interesting picks.
Shaw
Shaw is working through a major transition.
Last year, the company finally decided to get into the mobile business through its acquisition of Wind Mobile. The brand was later renamed Freedom Mobile, and Shaw is investing the funds needed to turn the division into a major national competitor.
To help cover the costs of the purchase, Shaw sold its media division to Corus Entertainment.
Some pundits questioned the move, especially as other competitors have ramped up their media presence, but the media sector is facing challenging times, and the full effects of the new pick-and-pay rules for Canadian TV services are not yet evident.
The addition of the mobile operations enables Shaw to offer full TV, internet, and phone packages, which is important for retaining its cable customers, and potentially attracting new internet customers from the other companies.
Shaw’s monthly payout of $0.0975 per share provides a yield of 4.3%. Once the heavy capital outlays for the mobile division are complete, investors could see a dividend increase.
The Keg
If you like a good steak, the odds are pretty good that you have been to a Keg restaurant.
The company has been around for a long time, which is impressive given the highly competitive restaurant sector. Much of the success can be attributed to the fact that the Keg has always followed a simple, but effective formula: provide great food and fantastic service in a fun and relaxing environment.
The company currently has 100 restaurants in the royalty pool that generated a 6.3% increase in revenue in Q2 2017 compared to the same period last year.
The current monthly payout of $0.0918 per share provides an annualized yield of 5.4%.
Altagas
Altagas just reported strong Q3 2017 results and raised its dividend by 4.3%.
The company owns gas, power, and utility businesses in Canada and the United States and continues to grow through strategic acquisitions, including an $8.4 billion deal to buy WGL Holdings.
Altagas expects the WGL purchase to close in 2018 and is targeting dividend growth of at least 8% per year for 2019-2021.
The new monthly payout of $0.1825 per share provides an annualized yield of 7.4%.
Is one more attractive?
All three dividends should be safe. At this point, I would probably make Altagas the first choice. It provides the highest yield and probably offers better dividend-growth prospects in the medium term.
