Investors searching for compelling dividend opportunities this September should consider these three ultra-high-yield stocks. Each offers substantial income potential and unique advantages that make them worthy of a closer look.
Whitecap Resources: A high-yield energy play with solid upside potential
Whitecap Resources (TSX:WCP) stock is an interesting investment in the energy sector, boasting a market capitalization of about $5.8 billion. This oil-weighted producer operates primarily in Alberta and Saskatchewan, projecting an impressive output of 169,500 barrels of oil equivalent per day (boe/d) and an anticipated $600 million in free funds flow for the year.
Management is focused on per-share metrics, including keeping their eyes on the funds flow and production per share. Whitecap Resources seems to be disciplined in its capital allocation, which has enabled it to offer a generous dividend.
Since 2021, the company has increased its dividend roughly 3.5 times, showcasing its commitment to rewarding shareholders. However, it’s important to note that the company has previously cut its dividend during periods of financial stress. Therefore, potential investors should consider both the dividend yield and the stock’s total return potential, which includes potential price appreciation.
Trading at $9.76 per share at writing, Whitecap Resources offers a yield of nearly 7.5%, distributed monthly. Analysts suggest that the stock is undervalued by approximately 30%, indicating potential upside of nearly 43%. This makes it an enticing opportunity for those looking for high yield coupled with growth potential.
Plaza Retail REIT offers consistent income
Plaza Retail REIT (TSX:PLZ.UN) presents a strong case for income-focused investors. This retail real estate investment trust (REIT) holds interests in 225 properties encompassing 8.9 million square feet across Canada. The REIT’s property distribution includes 27% in Quebec, 22% in New Brunswick, 20% in Ontario, 14% in Nova Scotia, 9% in Newfoundland and Labrador, and 6% in Prince Edward Island.
Since at least 2011, Plaza Retail REIT has demonstrated a consistent ability to maintain or increase its monthly cash distributions, with the current payout remaining unchanged since 2018. Because of the recent downturn in the REIT sector due to rising interest rates, the stock has also corrected meaningfully and, therefore, offers a generous yield of almost 7.4%. This yield is supported by a year-to-date payout ratio of 76% of funds from operations, so the payout appears to be sustainable.
As the interest rate environment stabilizes or potentially shifts towards rate cuts, Plaza Retail REIT could see a rebound in its stock price, offering the potential for substantial capital appreciation alongside its steady income.
Bank of Nova Scotia: A dividend powerhouse with global growth prospects
Bank of Nova Scotia (TSX:BNS) stock has been on an impressive upward trajectory recently, with its stock rising about 15% over the past 1.5 months. Despite this price increase, the bank still offers a robust dividend yield of 6%, one of the highest among its peers.
The bank’s dividend is well-supported by its earnings, reflecting its long-standing commitment to providing stable and secure dividends. Beyond its core operations in Canada, the Bank of Nova Scotia has a significant presence in developing markets, which could drive higher growth in the future.
Currently, the stock is fairly valued, and if it transitions back into a growth phase, it could deliver total returns of around 12% per year over the next few years. This combination of a solid dividend yield and growth potential makes it an attractive option for dividend investors.
The Foolish investor takeaway
Each of these dividend stocks offers a unique combination of high yield and potential for growth. Whether you’re drawn to the energy sector, retail real estate, or financial institutions, these picks provide substantial income opportunities and could enhance your investment portfolio this September. As always, thorough research and alignment with your financial goals are key to making informed investment decisions.
