For income investors, the year winding down was a stressful time. Central banks cut interest rates to near zero (or in some overseas cases, below). Bond yields plunged. Returns on guaranteed investment certificates followed suit.
Real estate investment trusts, which sparkled in 2019, took a vicious hit as investors worried landlords would not be able to collect rents. Those that specialize in shopping malls, office space and hotels were especially hard-hit. Some were forced to cut their distributions, including H&R REIT and, recently, RioCan REIT .
We also saw dividend cuts in other sectors, particularly oil and gas companies. The banks were ordered by the Office of the Superintendent of Financial Institutions to freeze their payouts.
But many income stocks escaped the carnage, and some even increased their payout despite the pandemic. These included some of the most widely held recommendations in my Income Investor newsletter, such as Brookfield Energy Partners LP, Brookfield Infrastructure Partners LP, Fortis Inc., and BCE Inc. But a number of smaller companies also fared well in this difficult year.
Here is a list of eight often-overlooked high-yielding stocks. Prices are as of Monday’s close.
Fiera Capital Corp. (FSZ-T)
-Most people are not familiar with Fiera, but it is the third-largest wealthmanagement firm in Canada. The shares tumbled in March but recovered during the summer as the stock markets rebounded from the spring setback. The company reported net earnings of $5-million in the third quarter (5 cents a share) compared with a loss of $14.7-million (14 cents) in the same period of 2019. That was well below the quarterly dividend of 21 cents a share. But chief financial officer Lucas Pontillo said that the company’s results have remained strong throughout the pandemic and noted that Fiera had repurchased $800,000 worth of shares. At the current price of $10.33, the yield is 8.1 per cent.
Firm Capital Mortgage Investment Corp. (FC-T)
Firm Capital is a boutique mortgage company, and there were concerns about its financial stability as pandemic fears rose. The stock dropped as low as $7.73 in mid-March as investors worried that borrowers would not be able to repay their loans. Management issued a series of calming statements, and by June, the stock was back in the $12 range. Meanwhile, the company maintained its monthly dividend of 7.8 cents a share (93.6 cents a year). At the current price of $12.49, the yield is 7.5 per cent. That’s on the high side, but Firm Capital has been a solid performer for many years. I have owned the stock for more than a decade.
B&G Foods Inc. (BGS-N)
This company is a New Jersey-based manufacturer and distributor of a wide range of food products. Its brands include Green Giant, Cream of Wheat and Maple Grove Farms, and the company recently acquired the Crisco line of oils and shortening. As with most food companies, B&G has done well this year. The company reported third quarter sales of US$495.8-million, up 22 per cent from last year. Adjusted net income was US$47.9-million (74 US cents a share, fully diluted). On a per-share basis, that was a gain of 37 per cent. The stock, which closed Monday at US$30.25, pays a quarterly dividend of 47.5 US cents (US$1.90 a year) to yield 6.3 per cent.
Capital Power Corp. (CPX-T)
It’s very encouraging when a company is able to increase its dividend in the midst of a pandemic. Edmonton-based Capital Power did just that in July, announcing a 6.8-per-cent increase to 51.25 cents a quarter ($2.05 annually), effective with the September payment. Third-quarter results showed normalized earnings attributable to common shareholders of $69-million (66 cents a share), up from $64-million (60 cents) the year before. The stock is trading at $34.61 to yield 5.9 per cent.
Corby Spirit and Wine Ltd. (CSW.B-T)
One thing the pandemic did not stop was alcohol consumption. Liquor stores were declared an essential service, and Corby’s business continued to prosper, albeit with some adjustments to the distribution channels. The company recently reported first-quarter 2021 results (to Sept. 30), and they were impressive. Net earnings were $10.8-million (38 cents a share, fully diluted), compared with $6.5-million (23 cents) in the year-ago period. The board of directors approved an increase of 10 per cent in the quarterly dividend, to 22 cents a share (88 cents a year). At a price of $15.38, the yield is 5.7 per cent.
TransAlta Renewables Inc. (RNW-T)
Green-energy companies did well in 2020 as traditional oil and gas firms struggled to cope with falling demand and lower prices. Most renewable companies have guaranteed contracts with customers and governments, which partially insulates some revenue from fluctuations in market prices. TransAlta owns 23 wind facilities, 13 hydroelectric facilities, seven natural-gas generation facilities, one solar facility, one natural gas pipeline, and one battery storage project. Third-quarter adjusted funds from operations were up 10 per cent year-over-year to $76-million. Cash available for distribution rose 8 per cent, to $73-million (27 cents a share). The stock, which closed Monday at $19, pays a monthly dividend of 7.833 cents (94 cents a year) to yield 4.9 per cent.
Atlantica Sustainable Infrastructure PLC (AY-Q)
Atlantica is a London-based sustainable company that owns a diversified portfolio of renewable energy, efficient natural gas, electric transmission and water assets in North and South America, and certain markets in Europe, the Middle East and Africa. Like other renewable-energy businesses, it has done well this year.
Third-quarter results showed net profit for the nine months to Sept. 30 was US$61.2-million, compared with US$60.8-million in the same period of 2019. Cash available for distribution increased by 13.6 per cent to US$52-million in the quarter compared with the third quarter of 2019 and by 6.4 per cent, to US$149.2-million in the first nine months of 2020 compared with the first nine months of 2019. In mid-year, the company raised its dividend by a penny, to 42 US cents a quarter (US$1.68 a year), for a yield of 4.5 per cent at the current price of US$37.11.
Leon’s Furniture Ltd. (LNF-T)
You would hardly expect a furniture conglomerate (Leon’s also owns The Brick, among other brands) to be reporting record financial results with many of its stores subject to COVID lockdowns. But that’s what’s happening here. Sales increased by 7 per cent year-over-year in the third quarter, to $762.8-million, compared with $712.6-million in the same period of 2019. Net income increased by 47.9 per cent, to $49.1-million, while diluted earnings per share grew by 50 per cent, to 60 cents.
CEO Edward Leon credited the strong results to the company’s investment in upgrading its e-commerce platform. The directors approved a 14.3-per-cent increase in the regular quarterly dividend, to 16 cents a share, plus a special dividend of 30 cents a share payable in January to shareholders of record as of Dec. 7. With the share price at $20.50, the 2021 yield will be 3.1 per cent, not counting any special dividend that might be declared during the year.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.