Dividends are portions of profits (or reserves) that publicly listed companies distribute to shareholders or income investors. The payout frequency is usually quarterly, although some companies pay monthly dividends. People turn to dividend stocks to meet income needs or augment regular income.
If you have free cash, transform it into monthly passive income by investing in high-yield stocks like Doman Building Materials Group (TSX:DBM) and Alaris Equity Partners (TSX:AD.UN). The former pays an 8.7% dividend ($6.27 per share), while the latter yields 7.86% ($17.24 per share).
Around 1,000 shares of Doman and 490 shares of Alaris, or a total investment of $14,717.60, will generate a total payout of $1,209.47. Divide the amount by 12, and you’ll have $100.78 monthly passive income.
|Company||Share Price||No. of Shares||Dividend per Share||Total Payout||Frequency|
Premier building materials distributor
Doman is the superior choice if you want exposure to the industrial distribution industry or expect a construction boom soon. The $546.2 million company has 32 operating plants and produces pressure-treated lumber. Besides lumber, it distributes building materials and renovation products in North America.
Canada CanWel Building Materials, a division at Doman, is a fully vertically integrated national distributor in the building materials and related products sector. The CanWel Fibre division operates a forest products company. Other revenue contributors include Hixson Lumber Company in the central U.S., California Cascade in the western U.S., and Honsador Building Products in Hawaii.
While net earnings in 2022 declined 26% to $78.7 million versus 2021, the consolidated revenue of $3 billion was a record. Its board chairman Amar S. Doman said the company’s growth strategy continues to unfold. As of year-end 2022, the company has paid a dividend for 52 consecutive quarters.
Doman added, “Despite inflationary and interest rate concerns, we remain enthusiastic, yet cautiously optimistic about the activity and demand for our products in many key markets on both sides of the border.” Market analysts covering DBM have a 12-month high price target of $9, or a 44% return potential.
Record year and improving business performance
Alaris deserves serious consideration following the record revenue of $190 million in 2022. The $781.2 million firm provides capital or creates long-term partnerships with profitable, well-managed private companies. These private company partners, mostly individual or family-controlled businesses, need growth capital, generational transfers, partial liquidity, or management or private equity partner buyouts.
The arrangement of Alaris with lower middle market companies in North America is through non-control, preferred equity investments (up to 85% recapitalization of equity). Apart from the historical free cash flow of more than $3 million, the business must be asset-light and have a low obsolescence risk.
Steve King, Alaris’s president, said the company is still operating at a historically strong level. Despite the recession forecasts of many economists, he feels that Alaris is uniquely suited to successfully weather a potential storm. The partners have low debt levels and minimal exposure to rising costs and refinance risks. On a year-to-date basis, Alaris is up 9.67% versus the broader market’s +6.43%.
Dividend investing is a smart strategy if idle money can produce steady income streams. So far, Doman and Alaris haven’t stumbled with dividend payments.