Top 10 Canadian High Yield Stocks – December 2020

Are you looking for income with high yield stocks? While the highest yield isn’t always the best investment, it’s a good place to start looking for income.

Based on stock price, which can move up or down depending on company news and performance, the list will change. As such, the opportunities will vary every month and that’s why it’s important to have a systematic approach to understanding which high yield stocks are an opportunity.

An opportunity can be for a stock you already own or simply for a new addition to your portfolio. It is important to note that the rankings below do not assess the viability of the business.

Top 10 Canadian High Yield Dividend Stocks

This month’s results are a snapshot in time at the time of writing and many factors could change the rankings. It’s important to be aware that a high yield stock can either be a good income source or a warning sign for the dividend.

Do look further into their payout strategy and history before committing to a high yield stock to avoid unnecessary risks on your portfolio. If high yield is necessary, look at the Canadian Financial ETFs, they also pay a sustainable high yield.

Be aware that high yield stocks could be as dangerous as investing in Canadian penny stocks.

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#1 – Chemtrade Logistic

CHE.UN - Chemtrade Logistics Chemtrade is a leading global provider of industrial chemicals and services. Chemtrade provides industrial chemicals and services primarily in North America and worldwide.

It also provides industrial services such as processing by-products and waste streams. It is one of North America’s largest suppliers of sulfuric acid and inorganic coagulants for water treatment.

The company is known for its reliable products and global distribution channels. Chemtrade’s business segments are sulphur products and performance chemicals (SPPC - 34% of Q3’18 revenues), water solutions and specialty chemicals (WSSC - 27%), and electrochemical (39%).

The company enjoys significant market shares in niche specialty chemicals. A diversified product portfolio and large geographic footprint are the company’s strengths and mitigate commodity risks. Chemtrade has a long history of acquisitions and successful integrations which has resulted in a more resilient business.

Its SPPC business derives 60% of revenue from risk shared contracts, while its WSSC business segment includes specialty chemicals with distinct barriers to entry.

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#2 – Brookfield Property Partners

BAM - Brookefield Asset Management Brookfield Property Partners is a diversified global real estate company. It owns and develops a wide range of properties such as office space, retail, multifamily, industrial, hospitality, triple net lease, self-storage, and houses.

Office space (41%) and residential (42%) account for more than 80% of total invested capital (in 2018), followed by LP investments (17%). Brookfield Property owns residential apartments in diverse, urban and suburban locations in over 20 U.S. states.

Most of its properties have above 90% occupancy. Brookfield Property has a good diversification across geographies as well as real estate sectors. The U.S. is its largest market accounting for 70% of AUM, followed by Canada, UK and Europe, Brazil, Asia, and Australia. The company has almost tripled its assets through strategic acquisitions in the last five years.

Most of its projects are in supply-constrained core markets having high entry barriers. Ownership of iconic properties in some of the world’s most dynamic markets is its strong competitive advantage. Brookfield is set to benefit from a growing urban population in the US.

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#3 – Keyera Corp

KEY - Keyera Corp Keyera Corp. is one of the largest independent midstream energy companies with extensive interconnected assets across Canada.

The company caters to the needs of oil and gas producers in the Western Canada Sedimentary Basin, and provides NGL gathering and processing, fractionation, storage, transportation, logistics and marketing services.

Keyera’s core infrastructure is strategically located in key producing areas of Western Canada Sedimentary basin and Edmonton/ Fort Saskatchewan energy hub. The company also markets iso-octane, propane, butane, condensate and crude oil to customers in Canada and the United States.

It operates through Gathering and Processing, Liquids Infrastructure and Marketing segments. Keyera has strong expertise in operating complex energy processing facilities and provides a full range of essential midstream services to its customers.

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#4 – Alaris Royalty Corp

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#5 – Fiera Capital

FSZ Fiera Capital Small Fiera Capital Corporation is a global independent asset management firm with over C$164.7 billion in AUM as at September 30, 2019.

The company delivers customized multi-asset solutions across traditional and alternative asset classes to institutional, retail and private wealth clients across North America, Europe and key markets in Asia.

The company strives to be at the forefront of investment-management science and we are passionate about creating sustainable wealth for clients.

Fiera Capital recognizes that the investment landscape is constantly evolving and seeks to draw on the global industry’s most innovative and diverse offerings to craft strategies that meet the needs of any client, anywhere they are located. 

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#6 – Enbridge

ENB - Enbridge Enbridge Inc. is the largest energy infrastructure company in North America. It is Canada’s largest natural gas distributor engaging in the collection, transportation, processing and storage of oil and gas. Enbridge caters to 3.7 million customers in Ontario, Quebec, New Brunswick, and New York.

It owns an extensive network of about 192,000 miles of natural gas and NGL pipelines across North America and the Gulf of Mexico.

Its crude oil and liquids transportation systems are huge comprising of more than 17,000 miles of active pipelines.

The company is known for its high quality liquids and natural gas infrastructure assets. In addition, Enbridge has 3.1 Bcf/d of processing capacity and 438 Bcf of net natural gas storage capacity. It also owns interests in nearly 3,000 MW of renewable generation capacity.

Enbridge operates through five reporting segments - Liquids Pipelines (52% of 2018 earnings), Gas transmission and midstream (22%), Gas Distribution (17%), Green Power and Transmission (4%), and Energy Services (5%).

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#7 – Pembina Pipeline

PPL - Pembina Pipeline Pembina Pipeline is a leading midstream and transportation service provider in North America. The company is known for providing safe and cost-effective transportation solutions since the last six decades.

The company offers a wide range of midstream and marketing services to the energy sector. It owns an extensive network of pipelines that transport crude oil, natural gas and natural gas liquids produced primarily in western Canada.

It also runs gathering and processing facilities and an oil and natural gas liquids infrastructure business.

Pembina owns a large asset base consisting of pipelines and facilities, which is difficult for newcomers to replicate. As a leading energy infrastructure company, Pembina serves multiple basins and markets throughout Canada and the US.

The company has 19 gas processing facilities and 6 billion cubic feet per day of net gas processing capacity. Pembina owns and operates an 18,000 km pipelines with a total capacity of 3 million barrels of oil equivalent per day.

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#8 – Extendicare

EXE - Extendicare Extendicare is a leading provider of senior health care and services across Canada. It operates through a network of 120 senior care and retirement living centers and home health care operations, under the Extendicare, Esprit Lifestyle and ParaMed brands.

The company engages in providing quality care and service that includes long term care (57% of 2018 revenue), home health care (38%), retirement living (3%), and management and consulting services.

Extendicare is at the forefront of senior care across Canada serving more than 85,000 seniors across the country. It owns and operates 58 long-term care homes across Ontario, Manitoba, Saskatchewan, and Alberta.

The company also owns 10 retirement communities in Ontario and Saskatchewan and provides home health care solutions across 35 locations in Canada. Extendicare is in a good position to gain from a growing aging population commanding care services.

The Canadian population with 65+ years of age is expected to rise by approximately 25% by 2036 and Extendicare should benefit from this trend, given its reputation for quality of service, a five-decade long experience and cost-effective solutions.

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#9 – Russel Metals

RUS - Russel Metals Russel Metals is one of the North America's biggest metal distributors and processors. The company is one of key distributor of metal products such as aluminium, stainless steel, carbon hot rolled and cold finished steel, pipe and tubular products as well as different types of non-ferrous specialty metals.

Russel Metals gets 35% of its revenues from the US with the remaining 65% of the sales comes from the Canadian market. The key business segments of the company are energy products( 38% of revenues) , metal service centers (51% of revenues) and steel distributors (11% of revenues).

In terms of products, valves, fittings, pipe products and plates account for the lion’s share of the company’s sales. The company has a large distribution network of 51 Canadian and 12 US centres which help supply 28,000 customers.

Russel Metals provides processing and distribution services to consumers in a diverse set of industries such as shipbuilding, equipment manufacturing, construction, shipbuilding, as well as mining and petroleum. Its well spread out network is strategically located to service customers in key Canadian and US energy markets.

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#10 – PrairieSky Royalty Ltd.

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Methodology

The top 10 high yield stocks identified are based on the highest yield of dividend stocks excluding REITs within the Canadian Dividend Performance List covering over 120 of the top Canadian stocks. For a REIT list, se the Canadian REIT list.

Please note that generating income with a high yield is a great short-term reward but it’s not without risks. Either a dividend cut is imminent or growth is limited. Make sure you look for the right stock for your portfolio and that you really understand the business you are investing in. I like to look at the Chowder Score to assess growth for both the stock appreciation and the dividend.

If you are interested in more details, the Canadian Dividend Performance List provides many more data points to help make your investment decision.

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DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.