Canadian retirees are searching for dividend stocks to help boost the returns they get on their savings.
This wasn’t always necessary, but the days of getting a high yield from GICs and savings accounts are long gone and unlikely to return in a substantial way anytime soon.
Lets take a look at three stocks that provide monthly distributions and offer above-average yield.
Inter Pipeline Ltd. (TSX:IPL)
IPL owns a mixed bag of assets that includes conventional oil pipelines, oil sands pipelines, natural gas liquids (NGL) extraction assets, and a liquids storage business in Europe.
The company has taken advantage of the downturn to add strategic assets at attractive prices, including the $1.35 billion purchase of two NGL extraction facilities and related infrastructure from The Williams Companies last year. The deal was done at a significant discount to the cost of building the assets, so IPL stands to see strong returns on the investment as markets improve.
In addition, IPL just gave its $3.5 billion Heartland Petrochemical Complex the green light. The facilities should be completed by the end of 2021 and could provide a nice boost to cash flow to support dividend increases.
IPL recently raised its monthly payout to $0.14 per share. That’s good for a yield of 6.6%.
Keg Royalties Income Fund (TSX: KEG.UN)
Investors who enjoy a fine steak are probably familiar with this restaurant. The Keg opened its first location in the early 1970s and has grown to the point where 100 locations are now part of the royalty pool.
The high-end restaurant market is a tough one, but The Keg has survived economic turbulence and changing trends by sticking to a simple, but effective strategy of providing great food with fantastic service in a fun atmosphere.
Revenue continues to grow at a slow, but steady pace, and investors can rely on the monthly payout to provide a juicy yield that currently sits at 5.7%.
Shaw Communications Inc. (TSX: SJR.B)(NYSE: SJR)
Shaw is working through a transformation that investors are finally seeing in a favourable light.
The company entered the wireless market last year when it bought Wind Mobile. The business was renamed Freedom Mobile, and Shaw is now busy investing in a network expansion that will enable the company to compete with its peers across the country.
The move should help stem the flight of cable customers and attract new internet clients, as Shaw can now provide attractive mobile, TV, and internet bundles.
To help pay for the move into the wireless game, Shaw unloaded its media assets. Some pundits questioned the wisdom of the move, but the content world is a tough one, and new pick-and-pay rules for Canadian TV subscriptions haven’t made things easier.
Shaw is the only big communications provider that pays its distribution monthly. The payout currently provides a respectable yield of 4%, and investors could see a return to dividend hikes once the big capital outlays for the mobile group are complete.
The bottom line
Dividend stocks come with some risk, but these three companies pay solid monthly distributions that should be safe and generate above-average yield for investors who are looking to get a bit more return out of their savings.
