For dividend investors, picking the right company to put in one’s portfolio can be harder than it looks, based on the number of criteria investors have for picking dividend stocks.
Some investors may want a healthy dividend yield upfront. Others may be more enamoured by a particular company’s dividend-growth profile over time. Still, others may be looking at the frequency of dividend payments and how these may align with their cash flow needs. For such investors, companies that pay monthly dividends may be more attractive.
The good news is that there are quite a few TSX-traded companies that pay monthly dividends. Here’s one top option for long-term investors that I think is worth putting $7,000 toward today and letting it sit for decades.
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Mullen Group
As Canada’s largest logistics provider, Mullen Group (TSX: MTL) is a company that may not get as much press as it probably should. The company’s ability to provide monthly dividend payments (with Mullen recently increasing its monthly distribution to $0.07 per share) has certainly been a key calling card for income investors looking to stick closer to home.
In my view, Mullen’s 5.9% dividend yield is really just the icing on the cake, with the company’s ability to consolidate the freight sector within Canada on full display in recent quarters. In other words, the company’s financials certainly paint a rosy picture for long-term investors from a growth perspective. Notably, Mullen’s stock chart above speaks to such a long-term trend.
The freight giant’s series of acquisitions made in recent years allowed Mullen to pose 7.5% revenue growth and operating income which was also up nearly 3% year over year. Net income did decline due to some margin pressures being felt as a result of the macroeconomic environment, but cash flow did improve during the past quarter, suggesting the company’s dividend remains well intact.
At Mullen’s current earnings run rate, its dividend remains well covered, though I’d expect to see an uptick in this department in the coming quarters. As the company moves through what’s been a relatively volatile period of time, I think investors will come out ahead, owning this company for the long term.
Dividends matter a great deal
The reality with a company like Mullen is it’s not for everyone. The freight business is a hard one. While Mullen has done a great job consolidating this space, it’s also true that this sector has some cyclical and macro exposure.
That said, for long-term investors banking on continued steady growth in the Canadian and North American economies, this is a monthly dividend-paying stock that I think is worth considering. It’s also worth noting that Mullen’s dividend is classified as an “eligible dividend” for Canadian tax purposes, providing additional tax benefits for those who reside in Canada.
Personally, this is a stock I think can continue to outperform and provide excellent total returns over the long haul. Excluding any sort of capital appreciation, Mullen will provide 6% just based on its dividend alone (and it’s paid monthly). Enough said.
