3 Companies Offer 4%-Plus Yields and Double-Digit Capital Growth
By: Ned Piplovic
Three companies in the basic materials sector rewarded their shareholders with double-digit percentage capital appreciation and 4%-plus dividend yields.
Over the last year, these three equities — a soda ash maker, a natural gas liquids producer and a paper manufacturer — have increased their respective stock value by 49%, 55% and 28%. In addition to the solid stock price performance, the companies heightened their dividends and currently yield 4.1%-7.4%.
While 2017 will be the third consecutive year of rising dividends for two of the companies, the third company has boosted its payout for the last seven years in a row.
While the earliest ex-dividend date for these three companies is in late March, interested investors may want to buy now, since dividend capture investors tend to drive share prices higher as the ex-dividend approaches.
Ciner Resources LP (NYSE:CINR)
Ciner Resources engages in trona ore (trisodium hydrogendicarbonate dihydrate) mining. CINR processes the trona ore into soda ash, which is a raw material in flat glass, container glass, detergents, chemicals, paper, and other consumer and industrial products.
The company’s most recent quarterly payout of $0.57 is equal to the amount paid in the previous two quarters. However, since the company has a record of boosting its quarterly payouts in the second or third quarters, the current annualized dividend total for 2017 should be on track to exceed the 2016 total. The current annualized payout of $2.27 yields 7.4% and any prospective dividend boosts in subsequent quarters should drive the annual dividend even higher.
The company’s share price rose 90% between its 52-week low of $20.48 on February 16, 2016, and its 52-week high of $39.10, which it reached in early July. The share price pulled back slightly in July 2016 and fluctuated mostly between $29 and $30 for the remainder of the year.
As of closing on February 14, 2017, the price was $30.50, which is 22% below its July peak and 49% higher than the 52-week low from February 16, 2016.
Westlake Chemical Partners LP (NYSE:WLKP)
Westlake Chemical Partners LP acquires, develops and operates facilities for processing natural gas liquids (NGLs). The company operates facilities, which primarily convert ethane into ethylene. It also sells ethylene co-products, such as crude butadiene, pyrolysis gasoline, and hydrogen directly to third parties on either a spot or contract basis.
The company’s quarterly dividend of $0.35 equates to a $1.38 annualized payout and a 5.6 yield. Since the company started paying a dividend in October 2014, it has increased its distribution each quarter. The largest dividend bump occurred in January 2015 when the company boosted its quarterly payout by 60% from $0.17 to $0.275. In the eight quarters since then, the payout rose consistently by 2.9% each quarter. Assuming a continuation of the current rising dividend policy, the total annual dividend for 2017 should be $1.44.
The company’s share price experienced some volatility and fluctuated between its 52-week low of $16 in February 2016 and $24 for the most of last year. Since mid-January, the share price increased 27% to reach a new 52-week high of 26.25 on February 2, 2017. The price closed on February 14, 2017, at $24.75, which is 5.7% below the recent high and 55% above the share price from February of last year.
Domtar Corporation (NYSE:UFS)
Domtar Corporation designs, manufactures, markets and distributes communication papers, specialty and packaging papers, and absorbent hygiene. The company provides copy and electronic imaging papers, as well as computer papers, preprinted forms, and digital papers for office and home use. Additionally, the company offers papers for thermal printing, flexible packaging, food packaging, medical gowns and drapes, sandpaper backing, carbonless printing, labels, laminating applications and more.
The company’s current annualized payout of $1.66 is paid quarterly and yields 4.1%. Since starting to pay a dividend in 2010, the company has boosted its dividend every year at an average growth rate of 31% annually. Therefore, the annual distribution rose more than 6.6 times from $0.25 in 2010 to the $1.66 projected for 2017. Since, the company has a record of boosting its quarterly payout mid-year, the total annual payout for 2017 could rise an additional $0.25 to $0.40 before the year is over.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.