These Canadian income stocks include an energy infrastructure company
Motley Fool Canada | December 2, 2016: If you’re interested in adding a monthly dividend stock to your portfolio or are looking to build a portfolio full of them, then you’ve come to the right place. I’ve scoured the market and selected two Canadian income stocks with high and safe yields over 6%, so let’s take a quick look at each to determine if you should buy one or both of them today.
Altagas Ltd. (TSE:ALA) is an energy infrastructure company focused on constructing, owning, and operating low-risk, long-life assets in North America. Its portfolio consists of a mix of natural gas, power, and utilities assets, including natural gas gathering and processing plants, natural gas pipelines, wind, hydro, biomass, and natural gas-fired power-generation facilities, and five regulated gas-distribution franchises.
Altagas currently pays a monthly dividend of $0.175 per share, representing $2.10 per share on an annualized basis, and this gives its stock a lavish 6.5% yield today.
It’s highly important to check the safety of a stock’s dividend before investing, and you can do this by checking Altagas’s cash flow. In its nine-month period ended on September 30, its normalized funds from operations (NFFO) totaled $383 million ($2.48 per share), and its dividend payments totaled just $233 million ($1.505 per share), resulting in a healthy 60.8% payout ratio.
Not only does Altagas offer a high and safe income stream, but it also offers dividend growth. Following the payment of its December dividend, it will have officially raised its annual dividend payment for six consecutive years, and its 6.1% hike in July, which was effective for its August payment, has it positioned for 2017 to mark the seventh consecutive year with an increase.
I think the growth potential of Altagas’s dividend is very strong going forward as well. I think its strong NFFO growth, including its 7.8% year-over-year increase to $2.48 per share in the first nine months of 2016, and its expansion plans that will fuel future growth, including its roughly $3 billion worth of projects that will be commissioned through 2020, will allow its streak of annual dividend increases to continue through 2025 at least.
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