Stock prices change or fluctuate for various reasons and are not limited to supply and demand. Top influencers include economic factors, investor sentiment, and company or industry performance. The TSX has displayed resiliency for most of 2024, although some stocks in 10 of 11 performing primary sectors trade at depressed prices.
In the industrial sector, Westshore Terminals Investment Corporation (TSX:WTE) is down 10.93% year to date but remains attractive to income-focused investors for its hefty 6.51% dividend yield. The current price of $23.01 is a good entry. Besides the quarterly payouts, you could earn more from price appreciation when this high-yield dividend stock rebounds.
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Industry position
Westshore Terminals has cemented its foothold in the minerals and mining transportation industry. The premier mover of coal in North America operates Canada’s largest coal export facility. Its technically advanced terminals handle over 33 million tons of coal annually for shipments to more than 20 countries worldwide.
The $1.42 billion company has storage facilities to stockpile coal for future loading into ships and derive revenues from loading fees or handling charges. Westshore has developed deep business relationships in the mining industry. The customer base includes railway giants like Canadian Natural Resources, Canadian Pacific Kansas City Limited, and BNSF Railway.
Consistently profitable
The 54-year-old company is consistently profitable, evidenced by positive financial results in recent years. Moreover, the ongoing major product diversification project assures an iron-clad future. Current and prospective investors can expect further business growth two years from now.
Westshore’s average net income in 2020 and 2021 was $117.1 million. However, the bottom line declined 38% to $66.8 million from the prior year due to lower coal loading volume and revenue caused by severe winter conditions. The business quickly recovered in 2023 as profit jumped 74.4% year over year to $116.5 million.
Fast forward to the second quarter (Q2) of 2024, and we see the usual stable, if not busy, operations. In the three months ending June 30, 2024, revenue and profit increased 13.6% and 18.8% year over year to $105.6 million and $34.6 million compared to Q2 2023. The tonnage grew 9.1% to 7.29 million tons from a year ago. Notably, cash flow provided by operations during the quarter climbed 95.8% year over year to $133.7 million.
Management said Westshore is entirely dependent on operating results for its cash inflows. The factors affecting them are the volume and mix of coal shipments, handling rates charged to customers, and administrative and finance costs.
Westshore is a reliable dividend payer. It has never missed a quarterly payment since June 28, 2010. The board also approved and declared special, non-recurring dividends in some years on top of the regular payouts.
Significant product diversification
In July 2021, Westshore Terminals entered into an agreement with BHP Canada to provide port services to the mining giant’s Jansen Potash Mine in Saskatchewan. The company will construct the infrastructure to handle potash up to 2051, subject to extension.
According to management, the potash project is progressing well and is on track to finish construction in 2026. Potash shipments will commence in the same year. The addition of potash is a significant product diversification for Westshore. It’s a new product the company will handle for the long term, an attraction for dividend investors.
