Skip to main content

These are not good times for income-oriented investors. Rising interest rates have put downward pressure on many high-yielding stocks, reducing the market value of their portfolios.

The dividends are still being paid. But people are getting edgy as they see the price of their shares pull back. No one likes a shrinking portfolio.

Fortunately, there are a few dividend stocks that are bucking the trend. Here are two. Prices are as of midday on Aug. 20.

Story continues below advertisement

Norbord Inc. (TSX, NYSE: OSB)

  • Type: Common stock 
  • Current price: $56.08, US$42.93 
  • Annual payout: $2.40 (variable) 
  • Yield: 4.28 per cent 
  • Risk Rating: Higher risk 
  • Website: www.norbord.com

Comments: Norbord shareholders received a pleasant surprise earlier this month when the board approved a special stock dividend of $4.50 for shareholders of record as of Sept. 1. Not surprisingly, the share price jumped on the news.

The announcement came after the company posted the best second-quarter results in its history with adjusted earnings of US$167-million (US$1.92 a share, fully diluted), compared with $US95-million ($1.10) in the same quarter last year.

Norbord manufactures oriented strand board (OSB), which is used in home construction. It is a cyclical company that is currently benefiting from high prices and strong demand for its products. Chief executive officer Peter Wijnbergen says that is expected to continue.

“Given the positive outlook for OSB demand in North America and Europe driven by continued growth in the construction and renovation of homes, as well as meaningful growth in industrial end uses and export markets, Norbord is well positioned to continue to return excess capital to shareholders, including through share repurchases," he said.

But a word of warning. This is a boom or bust company. Right now, it is going through a boom phase. But as recently as March, 2017, the quarterly dividend was only 10 cents a share and the stock was trading at around the $30 level. So, if you own the stock, enjoy the ride for now but be prepared to sell at the first sign of a slowdown in home construction.

If you don’t have a position and buy before Sept. 1, you will receive the special dividend, but the share price will probably drop after that date to reflect the big payout.

Pembina Pipeline Corp. (TSX: PPL, NYSE: PBA)

  • Type: Common stock 
  • Current price: $46.04, US$35.26 
  • Annual payout: $2.28 
  • Yield: 4.95 per cent 
  • Risk rating: Moderate 
  • Website: www.pembina.com

Comments: The company recently released strong second-quarter results that drove the price higher despite the headwind of higher interest rates.

Story continues below advertisement

All the numbers were impressive. Revenue came in at $1.9-billion, up from $1.2-billion in the same period of 2017. For the first six months of the fiscal year, revenue was $3.8-billion, compared with $2.6-billion the year before. The acquisition of Veresen last year was a major contributor to the revenue growth.

Earnings were $246-million (43 cents a share), up from $117-million (24 cents) in the second quarter of 2017. For the first six months, Pembina earned $576-million ($1.02 ) compared with $327-million (72 cents) the year before.

“We are seeing strong customer demand for our services, leading to higher volumes and increased utilization in the pipelines and facilities divisions, combined with rising commodity prices which drive solid performance in our marketing business,” CEO Mick Dilger said.

The monthly dividend was increased by a penny in May to 19 cents a share ($2.28 a year).

My newsletter rating on this stock is a buy as I see it as the best choice in the pipeline sector right now. Consult your financial adviser before making a decision.

Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter