Yield Hunt: 3 Canadian Stocks With Surprisingly Strong Dividends

Yield-thirsty investors can feast on the generous dividends of three under-the-radar stocks with market-beating returns.

| More on:

The Toronto Stock Exchange had a strong start this month, evidenced by the string of gains since May 1st. Yield-thirsty investors on the hunt for generous dividend payers have three lucrative options.

Atrium Mortgage Investment Corporation (TSX:AI), Acadian Timber (TSX:ADN), and InPlay Oil (TSX:IPO) fly under the radar, are outperforming the market, and have surprisingly strong dividends.

High-quality opportunities

Atrium deserves serious consideration following an exceptional year amid a challenging lending environment. The provider of residential and commercial mortgage services achieved several records last year. Because of its highest annual income in history, the $490.5 million non-bank lender declared a record special dividend ($0.29 per share). 

In the 12 months ending December 2023, net income rose 11.1% year over year to a record $51.5 million versus 2022, despite the provision for mortgage losses rising 521.4% year over year to $11.9 million. The $893.6 million record mortgage portfolio represents a 3.2% increase from the prior year.

Notably, 94.6% of Atrium’s portfolio is first mortgages, while the average loan-to-value is 64.1%. Management seized high-quality opportunities due to reduced activity from institutional lenders.

Performance-wise, current investors are up 9% year to date. If you invest today, the share price is $11.16, while the dividend yield is 8.12%. The monthly payout, not quarterly, is an added enticement. 

Profitable lumber and wood business

Acadian Timber owns vast freehold timberlands in New Brunswick and Maine. The $307.6 million company provides timber services and produces softwood and hardwood sawlogs, pulpwood, and biomass byproducts. It sells these products to regional customers.

The lumber and wood production industry is erratic, but Acadian has consistently delivered yearly profits amid headwinds. In Q1 2024, timber sales and services and net income increased 6.8% and 7.2% year over year to $23.9 million and $6 million, respectively. Notably, free cash flow (FCF) soared 108.7% to $7.8 million from a year ago.

According to its President and CEO, Adam Sheparski, timber sales volumes have rebounded at the start of the year. Also, Acadian recorded its first significant sale of carbon credits ($4.9 million) and entered a renewable energy option to lease.

Management expects the improving long-term demand for new homes, repair, and remodel activity to support the demand for Acadian’s products. At $18.08 per share (+7.2% year to date), the dividend offer is an attractive 6.51% (quarterly payout).

Ideal for frugal investors

InPlay Oil is a cheap option for yield-thirsty but frugal dividend investors. At only $2.53 per share (+10.5% year to date), the dividend yield is a hefty 7.59%. Like Atrium, this energy stock pays monthly dividends. Given the 50% payout ratio, the payout should be sustainable.

This $213.7 million company operates in West Central Canada, focusing on its concentrated light oil asset base in the Cardium Formation within the Pembina and Willesden Green pools. InPlay Oil has delivered positive earnings every year since 2020 during the oil price war and coronavirus breakout.

In Q4 2023, light oil production reached a quarterly record of 4,142 barrels per day (bbl/d), although net income declined 44.2% year over year to $11.6 million. For the year, InPlay returned $16.5 million to shareholders through the monthly base dividend and share repurchases.

Income boosters

Atrium Mortgage, Acadian Timber, or InPlay Oil are not typical anchors in a stock portfolio. However, they are excellent second-liners if you need a dividend or investment income boost. 

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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

data analyze research
Dividend Stocks

Dividend Powerhouses: Top Canadian Stocks to Enhance Your Portfolio

These stocks have increased the dividend annually for decades.

Read more »

dividends grow over time
Dividend Stocks

The Smartest Dividend Stocks to Buy With $5,000 Right Now

The smartest dividend stocks on the market can provide decades of growth on autopilot. Here's how and what stocks you…

Read more »

Canadian dollars are printed
Dividend Stocks

Build a Lucrative Passive-Income Portfolio With Just $35,000

Canadians can build a lucrative passive-income portfolio with a small capital and a pair of dependable dividend payers.

Read more »

profit rises over time
Dividend Stocks

Buy 2,990 Shares of This Stock for $165.25/Month in Passive Income

A high-yield dividend stock can transform your investment into monthly passive income streams.

Read more »

close-up photo of investor Warren Buffett
Dividend Stocks

3 Warren Buffett Stocks to Buy Hand Over Fist in November

Warren Buffett has been buying Occidental Petroleum (NYSE:OXY) hand over fist. He previously owned the similar Canadian oil giant Suncor…

Read more »

dividend growth for passive income
Dividend Stocks

Is Intact Financial Stock a Buy for its 1.8% Dividend Yield?

Intact Financial's dividend is not that attractive, but its strong history of execution and dividend growth are compelling factors for…

Read more »

Hourglass and stock price chart
Dividend Stocks

Where Will Brookfield Stock Be in 5 Years?

Based on its recent successes, Brookfield Corp (TSX:BN) looks poised to be more valuable in five years' time than today.

Read more »

hand stacks coins
Dividend Stocks

The Smartest Dividend Stocks to Buy With $400 Right Now

The market is full of dividend stocks to buy. Here's a look at two options that cater to both growth…

Read more »