Dividend stocks can be the best of both worlds. Not only do they provide you with a consistent stream of income, but you can also reinvest that income to buy more shares.
Often, the best dividends are already well known to the market. This pushes up the stock price, making the dividend yield less attractive. Finding under-the-radar dividend stocks can give you the income stream you desire without overpaying.
Here are three amazing dividend stocks that nearly no one is paying attention to.
Chemtrade Logistics Income Fund (TSX: CHE.UN)
Chemtrade recently hit a 52-week low, yet the company still pumps out the same monthly dividend of $0.10 per share. It’s paid the same dividend each month for nearly 15 years.
At the depressed share price, the dividend now yields an enticing 13%.
Chemtrade largely provides industrial chemicals to a wide array of customers. While each specific area is fairly commoditized, those that have scale can turn an attractive profit due to structurally lower costs. In most of its key businesses, Chemtrade is either the largest or second-largest competitor.
Last year the company generated $1.61 per share in distributable cash. In total, the dividend payments only equated to $1.20 per share. Chemtrade may have its ups and down based on short-term economic activity, but this long-term dividend payer has a long history of backing its 13% yield.
Rogers Sugar Inc (TSX: RSI)
Shares of Rogers Sugar haven’t moved much since 2011, although there have been plenty of swings along the way. One thing that has remained, however, is the company’s $0.09 quarterly dividend. Today, it provides a 6% yield.
Historically, Rogers Sugar was a pure-play sugar producer. In fact, the business was so simple that it was formerly structured as the Rogers Sugar Income Fund, which paid out most of its profits to shareholders. In 2011, the company shifted its strategy to ensure that the dividend could be maintained for years to come.
The biggest shift involved the move from commoditized materials toward value-add products. In 2017, it purchased multiple maple sugar companies, quickly building scale in a complimentary business with better economics.
Last year, the combined company generated $47.8 million in free cash flow, roughly $10 million more than was needed to service the dividend. With its traditional business still profitable, Rogers Sugar should be able to scale its maple sugar business and support an attractive dividend for another decade or more.
Western Forest Products Inc (TSX: WEF)
In January, I named Western Forest Products my top income stock for 2019. Since then, the total shareholder return is roughly flat, meaning that there’s still time to take advantage.
With a $700 million market cap, Western Forest Products now sports a 5% dividend yield.
Today, Western Forest Products is the leading cedar lumber, timbers, and Japan square manufacturer in North America. In a nutshell, the company turns raw timber into useable products.
From its facilities in B.C. and Washington, the company is perfectly positioned to export to international markets, particularly Asia. More than 60% of sales occur outside of Canada, making this stock a great way to diversify your portfolio.
Last year, the company generated $49 million in free cash flow, easily servicing the dividend which cost $34 million. Management opted to use the excess cash to help buy back $25 million in stock.
In total, Western Forest Products can easily support its 5% dividend while betting on itself by repurchasing shares.
