3 High-Yield Canadian Dividend Stocks for Income Investors

Russel Metals Inc. (TSX:RUS) and two other high-yield stocks look attractive right now for an income portfolio.

| More on:
The Motley Fool

Canadian investors are searching for reliable dividends to boost the returns they get on their savings.

Let’s take a look at Russel Metals Inc. (TSX:RUS), Inter Pipeline Ltd. (TSX:IPL), and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) to see why they might be interesting picks.

Russel Metals

Russel Metals is a major player in the North American metals distribution industry with operations including metals service centres, steel distributors, and energy products.

The stock took a hit during the worst part for the oil downturn, but things are improving. In fact, the company’s Q2 2017 numbers came in much better than the same time last year.

Management kept the dividend steady during the downturn, and investors who had the courage to buy at the lows are sitting on some serious gains today.

The quarterly dividend of $0.38 per share provides a yield of 5.9%.

IPL

IPL owns natural gas liquids (NGL) extraction assets, conventional oil pipelines, oil sands pipelines, and a liquids storage business in Europe.

The company continues to deliver solid quarterly results, and management has taken advantage of the downturn in the oil sector to acquire strategic assets at attractive prices.

The payout ratio in Q2 was about 73%, so the distribution should be safe, even if cash flow remains at current levels.

IPL’s stock is down amid the broader sell-off in the energy sector. The pullback might be a bit overdone, and, at the time of writing, investors can pick up a yield of 7%.

CIBC

CIBC is trading at a significant discount to its bank peers.

Why?

The market is concerned the company is too exposed to a potential meltdown in the Canadian housing market. A major crash would likely hit CIBC harder than the other banks, but things would have to get really bad before CIBC takes a serious hit.

In fact, the company said last year that it would incur mortgages losses of less than $100 million in the event house prices fell 30% and Canadian unemployment hit 11%. To put things in perspective, the mortgage book is larger than $200 billion.

The company is well capitalized, and the dividend should be very safe, even if the housing market hits a serious rough patch.

Management can’t be overly concerned about the revenue stream, as CIBC just increased the quarterly payout. The stock provides an annualized yield of 4.9%.

The bottom line

All three companies offer attractive dividends. An equal investment in each one would generate a return of about 6% at the current stock prices.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Walker has no position in any stocks mentioned.

More on Dividend Stocks

Canadian dollars in a magnifying glass
Dividend Stocks

3 High-Yield Dividend Stocks That Are Screaming Buys Right Now

Are you looking for great income stocks? Here's a trio of high-yield dividend stocks that pay insane yields right now.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Transform a $5,000 TFSA Into a $50,000 Retirement Nest Egg

The TFSA is a powerful tool that can grow a small investment into a substantial retirement nest egg over time.

Read more »

A meter measures energy use.
Dividend Stocks

Is Fortis Stock a Buy, Sell, or Hold for 2025?

Fortis has increased its dividend annually for the past five decades.

Read more »

analyze data
Dividend Stocks

3 Dividend Stocks That Are Screaming Buys in November

Here are three top dividend stocks long-term investors won't want to ignore during this part of the market cycle.

Read more »

senior relaxes in hammock with e-book
Dividend Stocks

Generate $175/Month in Passive Income With a $30,000 Investment

Dividend aristocrats offer reliability, and many of them also offer generous yields. With sizable enough discounts, these yields can become…

Read more »

dividends can compound over time
Dividend Stocks

Best Dividend Stocks to Buy Now for Canadian Investors

These three stocks would be excellent additions to your portfolios, given their solid underlying businesses, consistent dividend growth, and healthy…

Read more »

data analyze research
Dividend Stocks

3 Undervalued Stocks to Watch in November

Not all undervalued and discounted stocks are destined or poised to make a comeback soon, and a protracted timeline can…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

The Perfect TFSA Stocks for Long-Term Growth

Two industry heavyweights are perfect stock holdings in a TFSA for long-term money growth.

Read more »