1 High-Yield Dividend Stock With a Juicy 9.22% Payout

The Keyera stock is an attractive option for income investors looking for a juicy payout. This dividend all-star is yielding 9.22%, although it belongs in the volatile energy sector.

| More on:
Money growing in soil , Business success concept.

Image source: Getty Images

As COVID-19 continues to disrupt livelihoods and businesses, people look for earning opportunities to fortify liquidity positions. The stock market is highly volatile these days, but it’s the only place where you can make the most and create extra income.

Sometimes, you need to take on some risks to achieve your financial goals. Long-term investors generally have aggressive risk tolerance. Understand also that stock investing is a risk-and-reward endeavour. Theoretically, the higher the risk, the higher the returns.

Today, one investment prospect that should align with moderate to high-risk tolerance is Keyera (TSX:KEY). The energy stock is underperforming and losing by 34.51% year to date. However, the tradeoff here is that it’s a high-yield dividend stock. Despite belonging to the energy sector, income investors have been holding on this stock for years.

Impressive performance

The year hasn’t been good for Canada’s energy industry. Thus far, the COVID-19 pandemic is compounding the struggles of the most prominent players. Keyera isn’t exempt from the carnage, notwithstanding its status as the largest Canadian midstream energy company.

This $4.6 billion company from Calgary provides essential services to oil and gas producers in the Western Canada Sedimentary Basin. Other vital services include natural gas liquid (NGL) gathering and processing, fractionation, storage, transportation, logistics and marketing services.

More value-added services are diluent logistics services for oil sands customers. The company has built a reputation as an expert in operating complex energy processing facilities safely and responsibly. It has a firm industry footing owing to a talented management team and high-quality infrastructure business.

In the first half of 2020, the company reported strong results in the face of coronavirus and low commodity prices. Unlike other energy companies that incurred massive losses, Keyera posted positive numbers.

The net earnings for the six months ending June 30, 2020, were $103.4 million, although it was a 60.2% decline versus the same period in 2019. Still, management finds the results impressive and indicates a resilient integrated business supported by secure long-term contracts.

Growth drivers

Keyera’s 2020 capital program is going according to plan. Its Pipestone gas plant began processing volumes for anchor customer, Ovintiv, last month. This quarter, the company expects to commission the Wapiti gas plant (phase two) and commence operations in the Wildhorse crude oil storage and blending terminal in Cushing, Oklahoma.

The projects mentioned earlier should substantially complete the current capital program. Keyera will focus next on the development of the KAPS pipeline. The said pipeline will transport condensate and natural gas liquids from the Montney to the company’s liquids infrastructure assets in Fort Saskatchewan by 2023.

Because of the high entry barriers, Keyera expects to see further growth of its liquid infrastructure segment in the entire Western Canada Sedimentary Basin.

Dividend all-star

Assuming you can afford to invest $50,000 in Keyera, the dividend earnings would be $4,610 annually. In a 10-year holding period, your capital will compound by 241.6% to $120,779.08. Market analysts recommend a buy rating and set a price target of $30 (+44%) in the next 12 months. With its nine consecutive years of dividend increases, Keyera is a dividend all-star.

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.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends KEYERA CORP.

More on Dividend Stocks

edit Women wearing red sweater shopping online and using credit card at home office
Dividend Stocks

Safe Stocks to Buy in Canada for December 2023

A Big Bank and an iconic retailer are the safe Canadian stocks to buy in December 2023.

Read more »

Dividend Stocks

2023 TFSA Contribution Time: 2 Dividend Stocks to Buy with $6,500

Earn tax-free dividend income by investing in these top Canadian stocks via your TFSA.

Read more »

edit Sale sign, value, discount
Dividend Stocks

Seeking Value in a Declining Market: Canadian Stocks at a Discount

Check out these Canadian stocks trading at discounted valuations while also providing strong dividends and/or earnings results.

Read more »

Dad and son having fun outdoor. Healthy living concept
Dividend Stocks

Parents: How to Give the Gift of Cold, Hard Cash This Holiday

The best thing you can give your kid this holiday season? Cash! Use this method to make money on top…

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

Dividend Growth in the Canadian Market: Key Players and Trends

Are you looking for some Canadian dividend-growth stocks to hold for the long term? Check out these stocks for great…

Read more »

Businessmen teamwork brainstorming meeting.
Dividend Stocks

1 of the Best Dividend Stocks to Play an Economic Hard Landing in 2024

Fortis (TSX:FTS) stock won't rocket overnight, but it can help you fare well in a choppy next couple of years!

Read more »

edit Colleagues chat over ketchup chips
Dividend Stocks

3 Top Consumer Discretionary Stocks to Buy on the TSX Today

Three TSX stocks with varying market caps are the top buys in the consumer discretionary sector today.

Read more »

financial freedom sign
Dividend Stocks

Income Stocks: A Once-in-a-Decade Chance to Get Rich

Quality dividend stocks with a high yield such as Exchange Income offer you the opportunity to generate outsized gains.

Read more »