Income investors: this article is for you!
Today I’m going to discuss why all investors ought to consider Enbridge Energy Inc. (TSX:ENB)(NYSE:ENB), Nutrien Inc. (TSX:NTR)(NYSE:NTR) and WPT Industrial REIT (TSX:WPT) in March and for the long-term.
Enbridge has been a top pick of mine for quite some time. This stock will remain on my list despite concerns that the company’s shares have run too fast over the past 12 months. (Shares of Enbridge are up approximately 15% year over year at writing).
Enbridge’s stock continues to hold incredible value for investors for two key reasons: Enbridge’s 6% dividend yield and the fact that Enbridge offers long-term investors a level of revenue and income stability that is hard to match.
Bond yields continue to decline, making Enbridge’s 6% dividend yield extremely attractive compared to the 10-year government of Canada bonds with interest rates of around 1.2%. With Enbridge, you get five-times this yield, plus capital appreciation potential.
The level of revenue and income stability that Enbridge offers long-time investors is hard to match, which is mostly due to the fact that the key energy infrastructure assets owned by Enbridge are extremely rare.
This is because no new pipelines are likely to be approved, it seems, as is evidenced by recent rail blockades. I therefore feel that there’s significant long-term upside here that isn’t being appreciated by the markets.
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Nutrien Inc. (TSX:NTR)(NYSE:NTR) is another company operating in a sector which I believe is under-appreciated by financial markets: commodities. In general, this coronavirus scare has demonstrated just how fragile commodities are with respect to Chinese demand fluctuations.
Many investors have been scared away. That said, Nutrien does offer a juicy 4.5% dividend yield, letting long-term investors wait and hold what many other investors might deem an equity that is too risky.
At current levels, this coronavirus scare has depressed the share price of Nutrien to below a value level, making this a real deep value opportunity for investors.
The risk that coronavirus could absolutely destroy demand for fertilizer doesn’t seem like something long-term investors need to be concerned about. Food production will continue to increase at least in line with population growth over the long term, which makes the recent dip a clear long-term buying opportunity for a company like Nutrien.
WPT Industrial REIT
In the Real Estate Investment Trust (REIT) space, WPT Industrial REIT (TSX:WPT) has been one of my favourite choices for investors seeking yield alongside capital appreciation potential.
The industrial real estate sector is one which I believe has been severely undervalued by financial markets for a long time due to the rising importance of these properties, relative to retail or office real estate (which I would avoid).
The need for industrial/commercial warehouse space close to city centres is a key driver of the “just in time” (JIT) world we now live in. Next-day shipping is now a priority for most shoppers.
Companies like WPT own the real estate that provides distribution/sorting centers, fueling the e-commerce boom. These properties will continue to appreciate over time as investors begin to understand how important they are in the grand scheme of things.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends Nutrien Ltd.
Fool contributor Chris MacDonald does not have ownership in any stocks mentioned in this article.