3 High-Yield Stocks to Stick in Your TFSA Today

Inter Pipeline Ltd. (TSX:IPL) and another two out-of-favour stocks offer attractive yield with growth on the horizon.

| More on:

The pullback in the stock market has finally given income investors an opportunity to pick up some attractive dividend yields from companies that have stable payouts and strong growth prospects.

Let’s take a look at three income stocks that might be interesting picks today.

Inter Pipeline (TSX:IPL)

IPL operates oil sands pipelines, conventional oil pipelines, natural gas liquids (NGL) extraction facilities, and a European storage business.

Aside from the European operations, which have suffered from a drop in utilization rates in recent quarters, the company is doing well, especially the NGL processing group.

On the growth side, IPL is building a $3.5 billion polypropylene facility that is expected to generate annual EBITDA of at least $450 million after its completion in late 2021. The company also just made a storage acquisition in Europe for $354 million and successfully raised $200 million to cover part of the transaction.

The dividend should be safe, and investors can pick up an annualized yield of 7.5%.

Keyera (TSX:KEY)

Keyera is another player in the midstream segment of the Canadian energy sector, with assets that span gathering, transportation, storage, processing, and marketing activities.

The company just reported Q3 2018 results that trailed the same quarter last year, and that is causing some grief for the stock. However, Keyera is ahead of 2017 for the first nine months of the year, with 2018 net earnings of $1.11 per share for the first three quarters compared to $1.08 per share for the same period in 2017.

The company expects to complete $1 billion in growth projects in 2018 and an additional $800-900 million in 2019. As a result, revenue and cash flow should get a nice boost in the coming years.

Keyera recently raised the dividend by 7%, and investors should see distribution growth continue. The current payout provides a yield of 6%.

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)

CIBC currently trades at roughly 10 times trailing earnings. That represents a nice discount compared to some of its larger peers, and while the bank arguably carries more risk, the pullback in the past two months appears overdone.

CIBC has diversified its revenue stream through a major U.S. acquisition, and that should provide a hedge against any challenges that might come up in Canada. The bank carries a significant Canadian residential mortgage portfolio that pundits fear could cause grief if the property market tanks. That would certainly be negative, but CIBC can ride out a downturn and house prices across the board are holding up well, despite the sharp rise in interest rates over the past year.

CIBC’s dividend should be very safe and currently provides a yield of 4.75%.

The bottom line

IPL, Keyera, and CIBC all appear somewhat oversold today and pay attractive distributions. If you have some money to invest in your income portfolio, it might be worthwhile to start nibbling on these stocks while they remain out of favour.

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 stock mentioned.

More on Dividend Stocks

Canadian Dollars bills
Dividend Stocks

3 Monthly-Paying Dividend Stocks to Boost Your Passive Income

Given their healthy cash flows and high yields, these three monthly-paying dividend stocks could boost your passive income.

Read more »

Make a choice, path to success, sign
Dividend Stocks

The TFSA Blueprint to Generate $3,695.48 in Yearly Passive Income

The blueprint to generate yearly passive income in a TFSA is to maximize the contribution limits.

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »