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It’s Time to Buy This TSX Trio of 8% Yields  

The 8% dividend yield is something most investors dream about.

The problem with this dream is that more often than not, a company with an 8% dividend yield is in that position because of a faltering stock price.

However, when I saw Fool contributor Daniel Da Costa’s recent headline about Inter Pipeline’s (TSX:IPL) 7.8% dividend yield, one of my favourite energy-related TSX stocks, I just had to write about it and two other TSX stocks yielding more than 8% worth owning at the current time.

If you’re a dividend investor, this article ought to be right up your alley.

Why do I like IPL?

In November, I highlighted three reasons I like IPL stock. While solid earnings and a European expansion were at the top of the list, it was the company’s dividend history that stood out for me.

Inter Pipeline increased its annual dividend in 2018 for the 10th consecutive year. I thought I’d seen somewhere that it was 15 years, but that’s incorrect. Nonetheless, 10 years is pretty darn good for an industry that’s seen its share of trouble in recent years.

As Da Costa pointed out, Inter Pipeline’s grown its dividend by 7.3% compounded annually over the past decade, and 5.3% annually over the past five years. Any time you can find a company with 5% annual dividend growth, you’ve got an attractive stock in front of you.

That’s because dividend growth follows earnings growth.

Stable revenue and income make IPLs 8.2% dividend yield as a sure a bet as you’re going to find over 8%.

The lending business that gets no credit

Alaris Royalty (TSX:AD) was sailing along in 2019, up 26% year to date through the end of March — and then the wheels fell off. An analyst who covers the alternative lender distributed a research report that said Providence Industries, one of the company’s partners, had its March distribution to Alaris blocked by its senior lenders.

Alaris responded that the blockage was a non-material event accounting for just 5% of the company’s overall revenue. Furthermore, it would reach a resolution with Providence and its senior lenders.

On May 6, Alaris announced its Q1 2019 results. In the press release, it revealed that it had resolved the issue with Providence and distributions have resumed, albeit at 50% of the initially contracted amount of $5.9 million annually.

Consider what CEO Steve King had to say about Alaris’ results.

“Since Q1 17, Alaris’ revenue and normalized EBITDA per share have grown by 32% and 36% respectively with very little volatility each quarter in between, while Alaris’ shares have not traded in this same manner,” King stated.

Yielding 8.8% at the moment, I don’t think you’re going to find a better value than Alaris stock.

Healthcare real estate is booming

As we age, the need for medical offices, seniors housing, and skilled nursing facilities continues to grow. That’s good news to Indiana-based Invesque (TSX:IVQ.U), which owns 102 healthcare properties in 20 U.S. states and two Canadian provinces with more than 8,500 beds and 577,000 square feet of medical office buildings.

The buildings come with triple-net leases, which means that healthcare operators are responsible for all of the maintenance and upkeep of a building, resulting in stable cash flows that go toward paying out its dividend — one that’s currently yielding 10.7%.

Currently, 30% of its properties are seniors housing; 30% are skilled nursing facilities; 30% are medical office buildings; and outpatient surgical centres, while the remainder goes to debt and equity for developers of these types of properties. These are properties that it has a right to acquire in the future, providing it with a built-in pipeline for future growth.   

In 2018, Invesque paid US$425 million to acquire Care Investment Trust, a transformative deal that added 42 properties to its healthcare portfolio, all of them in the U.S.

With an experienced management team, investors can expect Invesque to continue its expansion in healthcare real estate.

Fool contributor Will Ashworth has no position in any stocks mentioned. Alaris Royalty Corp. is a recommendation of Stock Advisor Canada.

 

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