When it comes to investing, there are some stocks that just stick out. And one of those is Fortis (TSX: FTS). While Fortis is certainly a Dividend King, boasting a reliable payout history and a respectable yield at 3.91%, it might not be the most exciting buy out there.
While that doesn’t necessarily point to a reason not to invest, the growth might. The stock’s growth has lagged behind broader market indices, with a 12.10% gain over the past year compared to the S&P 500’s 25.61% increase. Furthermore, its high debt levels and relatively modest return on equity of 7.44% could be seen as limitations in a market, especially where investors are increasingly seeking both income and growth potential.
So, while Fortis stock offers stability, it may lack the oomph for those looking for more dynamic returns. Luckily, there are other high-yielders that may offer it instead.
SmartCentres
SmartCentres Real Estate Investment Trust (TSX: SRU.UN) looks like a compelling high-yield buy right now, thanks to its robust dividend yield of over 7%. This is significantly above the average for real estate investment trusts (REIT) on the TSX. And certainly higher than what you would get with Fortis. With a strong occupancy rate of 98.2% and a solid portfolio of retail and mixed-use properties across Canada, SmartCentres has demonstrated consistent cash flow generation. This makes it a reliable income generator for investors.
Plus, the ongoing development projects, including residential and self-storage properties, add an extra layer of growth potential that can drive future value and keep those dividends flowing. In addition, the stock is trading at a price-to-book ratio of 0.83, and investors can see that it is undervalued compared to its assets. This provides a margin of safety for investors looking to add a quality REIT to their portfolios.
Even though the payout ratio is on the higher side, the trust’s well-diversified portfolio and steady rental income offer confidence that the dividends are sustainable. So, if you’re hunting for a high-yield opportunity with a solid track record and growth prospects, SmartCentres might be just the ticket.
Extendicare
Extendicare (TSX: EXE) is looking like a fantastic high-yield stock to add to your portfolio right now as well. With a forward annual dividend yield of 5.39% at the time of writing, it’s delivering an impressive income stream. And this is especially appealing in today’s market. The company’s strong financials back up this yield. Recent earnings show significant growth in revenue, net income, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). This stability and growth in earnings support its solid dividend, making it a reliable option for income-focused investors.
Moreover, Extendicare has been making strategic moves that enhance its long-term potential. The company has been improving its operating margins thanks to increased funding in long-term care and home healthcare services. Its continued expansion in managed services and successful real estate transactions, like the recent long-term care redevelopment project sale, demonstrate its commitment to maximizing shareholder value. So, if you’re on the hunt for a steady, high-yield stock with growth potential, EXE on the TSX is definitely worth a closer look.
