Two chemicals stocks are worth a look at the moment, selling with attractive value and paying tasty dividends. The first of these is Chemtrade Logistics Income Fund (TSX:CHE.UN), selling at a reasonably good price and displaying a fairly good balance sheet while paying a high and dependable yield. The second is Methanex (TSX:MX)(NASDAQ:MEOH), which is attractively valued and also pays a stable dividend.
A high yield with no catch?
Chemtrade currently pays a dividend yield of 11.17%. This is an extremely rich yield for the TSX, but is it sustainable? Paying a regular monthly distribution for the past 12 years, Chemtrade’s dividend is not only assured, but the yield also becomes all the more attractive whenever the stock dips in price. Currently trading closer to its 52-week low than its year-long high, newcomers have a good opportunity to lock in a healthy percentage right now.
Chemtrade is similarly valued to potash producer Nutrien in terms of assets, and while its balance sheet isn’t as healthy, Chemtrade packs a mean punch in its sector, with worldwide distribution of three crucial chemical segments. These comprise sulphur, specialty chemicals, and electrochemicals, with the latter being its biggest money maker, and the U.S. being its most profitable market. Indeed, Chemtrade has a lot of growth to look forward to, which bodes well for shareholders.
A moat so wide it owns a shipping fleet
With a three-year return of 19.2% including its distribution, Methanex is an outperforming stock which pays a stable dividend. Currently yielding 4.14%, the stock is far less volatile than Methanex’s main product, methanol. Data-focused investors will note that the stock tends not to react as much to earnings updates or management changes in the way a lot of other stocks do. Selling at half the P/E ratio of its peers, Methanex is also a solid play for value.
Methanex was once a stock on a tear, climbing steadily from 2016 until its peak almost a year ago. Today, Methanex shares trade at a fraction of that all-time high and is now not far off its all-time low. This shouldn’t deter a potential investor, though, since this wide-moat company looks more like a value opportunity than a value trap.
A strong choice for any investor who knows a thing or two about supply chains, Methanex operates the world’s largest fleet of methanol ocean tankers. Its subsidiary, Waterfront Shipping, is wholly owned and forms part of a vast network of supply management that also comprises rail, truck, and pipeline transport. In short, the company’s stock is a solid bargain and geographically diversified enough for a low-risk income portfolio.
The bottom line
Between Chemtrade’s nearly 12% yield and Methanex’s deep discount and solid market share, investors could do worse than to stack shares in these high-flying materials companies. Methanex has a strong business model and is relatively healthy, making for a secure long-term investment for fairly worry-free dividends. Chemtrade is also relatively low-risk, and while a market correction could affect both companies’ bottom lines, they’re as safe as any industrial stock.
