No Savings? 2 Stocks That Will Get You Started

Canadians with no savings have a way to catch up. The key is to save consistently regardless of the amount. Slowly accumulate shares of the Pembina Pipeline stock and Exchange Income stock to get you started. Your money should grow over time.

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BNN Bloomberg reported that Canadians are boosting their finances instead of spending during the pandemic. According to the Nanos Research Group’s poll results, paying down debt and retaining an elevated level of savings were the priorities of three in four Canadians.

About 13% of poll respondents want to invest in the stock market. Based on data from Statistics Canada, the household savings rate in the second quarter rose to 14.2% from 13.1% in the previous quarter. However, the rate forecast for the third quarter is lower at 7.9%.

For those with no savings, it’s not too late to build funds for emergency use or the future. Two high-yield stocks can get you started. Apart from the high yield, Pembina Pipeline (TSX:PPL)(NYSE:PBA) and Exchange (TSX:EIF) pays monthly dividends. You can reinvest the dividends 12 times a year, not four, for faster compounding of your money.

Future growth paths

Pembina Pipeline has grown to a formidable $21.9 billion enterprise since starting with only a single pipeline in 1954. The company has increased its dividends every year, beginning in 1998. Today, the energy stock is a core holding of many income investors because of its Dividend Aristocrat status.

With its 6.33 % dividend, any investment amount will double in less than 11.5 years. Pembina currently trades at $39.79 per share, a year-to-date gain of 38.97%. The operations didn’t suffer as much in the COVID year and until the present. In the first half of 2021, net earnings dipped slightly (0.5%) versus the same period in 2020. However, revenue growth was 36.1%.

Pembina lost a monster deal recently but successfully cornered three transformational partnerships that assure future growth paths. Momentum is on the side of the pipeline operator, given the rising volumes and project reactivations. It also boasts over $5 billion in a development portfolio that consists of high economic growth projects.

Adequate diversification

Exchange Income (EIC) is a monthly income stock like Pembina Pipeline. At $44.75 per share, the industrial stock pays a 5.09% dividend. EIC has rewarded investors with a total return of 3,053.77% (20.29% compound annual growth rate) in the 18.68 years regarding the historical stock performance. Its year-to-date gain is 26.89%.

The $1.7 billion company operates in the aviation industry, although it’s more acquisition-oriented. Its two business segments, aerospace & aviation and manufacturing, lend adequate diversification. The company has 11 income contributors, so EIC has the strength to overcome economic cycles.

In the aviation industry, it offers scheduled passenger services, cargo handling, fire suppression & evacuation services, and medevac transportation. The remaining seven are in the maritime, communications, and manufacturing sectors. The business is slowly returning to normal in 2021.

EIC reported net earnings of $23.6 million in the first half of 2021 versus the $2.67 net loss a year ago. Similarly, revenue and free cash flow increased 13.1% and 22.1%, respectively. According to CEO Mark Pile, maintaining a strong, liquid balance sheet that will help EIC move quickly on opportunities is the hallmark of management’s strategy.

Save consistently

Canadians with little or no savings shouldn’t be discouraged. Play catch-up by freeing as much cash whenever possible. Use the money to accumulate shares of monthly income stocks slowly. Your money could grow or even double in time if you save and invest consistently.

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 PEMBINA PIPELINE CORPORATION.

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