Buy Alert! A Canadian High Dividend Stock Yielding Over 20%

Summary

  • An iron ore pellets corporation’s stock has a dividend yield of 20.56 per cent, with a lucrative quarterly cash dividend of C$ 1.80.
  • The stock has a handsome one-year return of over 74 per cent, with earnings per share of C$ 3.13.
  • It has an impressive return on equity of 34.41 per cent and a positive return on assets of 25.92 per cent.

 

A dividend-paying company distributes a part of its gains to its shareholders, rewarding them monetarily or via stock options. High dividend yield stocks represent an attractive income option for shareholders. While these stocks may not be as exciting as booming growth stocks, investors expect hefty payments with dividend stocks. However, it is important to remember that companies navigating turbulent times, such as the pandemic, may end up slicing dividend payouts. Hence, dividend stocks are not really the path to take for long-term success.

In this article, we take a look at an iron and steel firm’s stock that has been growing on all fronts. This stock is offering a tempting 20.56 per cent dividend yield, with a one-year return of more than 74 per cent.

This commodity stock could be a good opportunity for investors as iron ore price may see fresh highs in post-COVID environment.

Let us delve into this basic material stock’s market fundamentals:

 

Labrador Iron Ore Royalty Corporation (TSX: LIF)

 

The Toronto-based corporation operates through its equity and royalty interests in Iron Ore Company of Canada (IOC), an iron ore pellets producer and exporter. Its market cap stands at C$ 2.25 billion.

The company distributed a quarterly dividend of C$1.80 per share for the fourth quarter of 2020, a massive hike of 620 per cent as compared to its previous quarter dividend of C$ 0.25.

The stock has grown more than 7 per cent this year and closed at C$35.02 on Thursday. Its five-year average dividend yield stands at 7.65 per cent. The earnings per share is C$ 3.13 with a return on equity of 34.41 per cent and a return on asset of 25.92 per cent.

Image Source: Kalkine Group @2020

 

Labrador Iron posted revenue of C$ 52.4 million for the third quarter of 2020, a rise of 15 per cent year-over-year (YoY) against C$ 45.5 million for the same period of 2019. The company’s net income increased marginally by 0.2 million YoY for the quarter.

The corporation held a debt-free balance sheet and registered working capital of US$ 29.8 million at the end of the third quarter.

For 2021, IOC forecast iron pellets and concentrate ore production guidance in the range of 17.9 million tons to 20.4 million tons.

The metal company will announce its fourth quarter results on March 4, 2021.


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