Dividend investing is becoming a popular strategy among people wanting to build wealth at a faster pace. High-yield stocks are powerful investment instruments to boost passive income and, at the same time, provide more investable funds. Three stocks are currently on the radar screens.
Top-tier entertainment and media company
Cineplex (TSX:CGX) is a well-known Canadian brand operating a chain of theatres and strategically located entertainment venues. There is a perception that companies that can afford to pay high dividends are awash with cash. This impression might not hold true anymore for Cineplex, since movie-going has its lost appeal.
Cineplex is paying a high 7.18% dividend, although the stock is underperforming so far this year. The current price of $24.44 is -2.63% lower than its starting price in 2019. Needless to say, Canada’s largest and most inventive film exhibitor is working to counter the diminishing patronage in movie theatres.
The company is counting on several businesses in the digital commerce space to counter the dwindling revenues in movie theatres. CineplexStore.com, Cineplex Events, Cineplex Media, Cineplex Digital Media, Player One Amusement Group, and WorldGaming.com are the results of the company’s diversification.
Fastest-growing energy services company
Ensign Energy Services (TSX:ESI) pays a dividend of 8.07% with the stock trading at $6.35 and is up +32.57% year to date. This $997.4 million oil and gas drilling company is regarded as a global leader in oilfield services. They offer land-based services for oil, gas, and geothermal energy.
The company has established operations in Canada, the U.S., and nine other foreign countries. Ensign bought 89.3% of Trinidad Drilling in Q4 2018 to strengthen its industry muscle and fortify geographic footprint.
Ensign had a net loss of $37.6 million in 2017. When crude oil and natural gas commodity prices recovered in 2018, the demand for oilfield services instantaneously increased. The company made a turnaround on both financial and operating sides. Net income soared to $58.3 million.
Technology for the oil & gas industry
Computer Modelling Group (TSX:CMG) is a partner of the oil and gas industry. The company’s reservoir simulation software is sought after by companies in need of advanced processes reservoir modelling software. This $466.1 million company has been around for 41 years.
The company’s software application combines AI and machine learning with statistical analysis and non-biased data interpretation. The various simulators are intended to provide dependable primary and secondary oil recovery processes whether in conventional or unconventional oil/gas reservoirs.
CMG’s current price of $5.81 is slightly lower than its starting price in 2019. The stock could be a great long-term hold as the 6.7% dividend appears sustainable. Revenues from contracts are recurring, so there’s less risk even if clients bottom out. Besides, no company can provide the same efficient software.
Companies that pay high dividends are not automatically sound investments. Buying these stocks are opportunities to accumulate wealth. But they can be volatile choices too. You need to evaluate first if the business is viable and enduring. A major business reversal can lead to a dividend cut or scrapping of dividend payments.
When you buy heavily cyclical stocks at low prices… and then hold the shares until the cycle reaches its peak… you can make a very healthy profit.
Every investor knows that. But many struggle to identify the best opportunities.
Except The Motley Fool may have a plan to solve that problem! Our in-house analyst team has poured thousands of hours into their proprietary research – and this is the result.
Our top advisor Iain Butler has just identified his #1 stock to buy in 2019 (and beyond).
Fool contributor Christopher Liew has no position in any of the stocks mentioned. Computer Modelling Group is a recommendation of Stock Advisor Canada.