Many investors that put dividend sustainability and stock stability first end up choosing almost exclusively from blue-chip stocks. However, there are many trusted names in mid-cap segments of the market, and many of them offer healthy yields and financially stable and resilient dividends.
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A wealth and asset management company
From a market capitalization perspective, IGM Financial (TSX: IGM) lives on the edge and hovers between mid cap and large cap. It’s in the large-cap segment of the market right now, with a market cap of over $11 billion. The price-to-earnings ratio is quite modest at 10, despite its powerful bullish momentum, but it hasn’t yet risen too much for its yield to shrink below the desirability threshold.
The current yield is around 4.8% and the payout ratio is quite safe at 60%. The company has sustained its quarterly dividends for at least nine years at $0.5625 per quarter per share. It’s a reliable dividend stock with a good yield, and if you buy it now, it has modest capital-appreciation potential. However, in the long term, the dividends are likely to be its most attractive feature, not the performance.
A mortgage company
Another worthwhile pick from the financial sector is First National (TSX: FN), which falls quite close to the lower edge of mid-cap with its $2.6 billion market cap. However, the company is a leader in its niche — i.e., non-bank mortgage lenders. The mortgage market in Canada is mainly dominated by conventional banks, and First National is one of the few giants outside this pool.
Its history is its most significant endorsement as a dividend pick. The company has been growing its payouts for 11 years. It’s an established Aristocrat with a solid 5.6% yield and a relatively safe payout ratio of 81%.
A REIT
While we can’t place it in the undervalued stocks category, Allied Properties REIT (TSX: AP.UN) is one of the most brutally discounted REITs in Canada right now. It has lost about two-thirds of its value (over 66%) in the last five years alone, and the chances of a revival in the near future seem thin.
The best thing about this dividend stock is its 10% yield. The dividend history is also worth considering, as the REIT has grown its payouts for over a decade. However, the fact that it hasn’t raised its payouts since last year is concerning, and we have yet to see whether it will hold on to its title as an Aristocrat.
The FFO payout ratio of 81% gives us hope that the REIT might at least be able to sustain its payouts, and buying now to lock in this magnificent yield can be quite powerful for your dividend portfolio.
Foolish takeaway
The three mid-cap stocks have rewarded their investors with financially stable and reliable stocks, often at generous yields, for the past several years. Considering their current financial situations and market conditions, they are expected to sustain these dividends in the future as well, making them worth looking into.
