With so many exciting things happening in the world, it’s easy for investors to get swept up and forget about the fundamentals of investing and the fundamentals of the business in which they invest. When deploying capital, the most basic question remains unchanged: what am I paying versus what am I getting? This question has never been so important.
When investors purchase a stock, they are essentially giving up their hard-earned money and receiving a part of a company may or may not pay a dividend on a regular basis. As has traditionally been the case, new companies, which are much more innovative than more established companies, will retain 100% of the capital available in the hopes of doing something very innovative with it. In almost all cases, investors are fine with this, as there is the potential to develop something that will return a substantial amount of value.
For those who are happy to pass on the excitement, there are a number of extremely fruitful securities that will offer consistent and growing dividends that can make any long-term investor extremely wealthy. In spite of giving up the large excess returns that can happen in a short period, the very high likelihood of receiving an average or above average return over a multi-year period is something that will attract the attention of many investors.
The first name to consider is none other than North West Company Inc. (TSX: NWC), which at a current price of nearly $27.50 per share offers investors a dividend yield of close to 4.65%. Although a company that operates general stores or grocery stores in remote parts of Canada and Alaska may not seem very exciting to many, the reality is that this name may be one of the most consistent and exciting dividend growth stories over the next few years.
With a current quarterly dividend of $0.32 per share (up from $0.31 five quarters ago), shareholders may be in a prime position to see another penny increase in their dividend payment to a $0.33 payment. At this hypotheticall7 higher rate, the dividend yield would be 4.8%, thereby indicating that the stock is close to bottoming out. For investors who are prepared to do their homework, the bottom of this stock is typically a function of the dividend yield. At a 5% yield, there is very little additional downside.
The second name for investors to consider is none other than Intertape Polymer Group (TSX: ITP), which at a price nearing $18.50 per share is beginning to look extremely interesting. As the dividend yield approaches the 4% mark and the company continues to improve its operating efficiencies, it will be difficult for investors to remain patient. With so much potential for investors to obtain regular dividend payments (and increases), the “boring old stocks” just may be the way to go over the next year.
