A fourth rate cut by the Bank of Canada on October 23, 2024 is likely. The stock market has reacted positively to the rate-cutting cycle that began in June. As of this writing, the TSX is now up 18.4% year-to-date, following a 9.2% advance in three months. The focus on dividend-paying stocks has heightened with this development.
If you have $5,000 to invest, Doman Building Materials (TSX: DBM), PHX Energy Services (TSX: PEY), and High Liner Foods (TSX: HLF) are the smartest buys today. Besides their attractive dividend yields, all three have outperformed thus far in 2024.
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Leading distributor and builder
Doman distributes building materials and home renovation products in North America. The $767.2 million fully integrated national distributor caters to clients in new home construction, home renovation, and industrial markets. At $8.79 per share, the industrial stock is up 12% year-date and pays a 6.4% dividend (quarterly payout).
In the first half of 2024, net earnings dropped 28.9% to $31.4 million from a year ago. Board Chairman Amar S. Doman said there was significant volatility in general activity during the period, including lower average pricing compared to last year. Nonetheless, he was pleased with the financial performance.
“We continued to tightly manage inventory levels and maintain a fairly robust gross margin level during what I would consider a challenging period in the industry,” Doman added. Early this month, Doman acquired CM Tucker Lumber. The South Carolina-based company will help expand its footprint in the United States.
TSX30 Winner
The energy sector is strongly represented in the 2024 TSX30 List, an annual ranking of Canada’s top 30 performing stocks. PHX Energy Services ranked 20th with a 152%-plus return in three years (dividend-adjusted). Also, at $9.64 per share (+27% year-to-date), the dividend yield is a hefty 8.3%.
This $448.6 million oil and natural gas services company and its subsidiaries provide horizontal and directional drilling services. The customer base comprises oil and natural gas exploration and development companies in Canada and the United States. PHX has been operating for almost 30 years.
According to management, the industry environment is flat or contracting this year. However, PHX’s fleet of premium technology and lower capital expenditures in 2025 will support growth in North America’s market.
Consumer Defensive
High Liner Food is an established processor and marketer of frozen seafood in North America. The $404.9 million company from Lunenburg is 125 years old this year and has been a TSX consumer-defensive stock for 50 years. Current investors enjoy an 18.5% year-to-date gain on top of the 4.4% dividend. The $13.53 share price won’t dent your pocket.
In Q2 2024, sales declined 14.2% year-over-year to $218.3 million, while net income climbed 227.7% to $19.3 million compared to Q2 2023. According to its President and CEO, Paul Jewer, High Liner’s profitability continues to grow, notwithstanding the current market softness.
“As we navigate a dynamic market, we remain focused on leveraging the diversity of our supply chain, customer base and portfolio across price points,” Jewer added.
Price-friendly
Doman, PHX Energy Services, and High Liner Foods are price-friendly but generous dividend payers. Any of the three stocks can boost your investment income at less cost.
