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As the Canadian market navigates a period of economic recalibration, characterized by easing inflation and cautious central bank policies, there is growing interest in dividend-paying stocks as a strategy to balance growth potential with stable returns. Here is a look at three dividend stocks currently garnering attention:
Centerra Gold (TSX:CG)
Centerra Gold Inc., a gold mining company with a market capitalization of CA$1.98 billion, operates in North America, Turkey, and other international locations. The company is involved in the acquisition, exploration, development, and operation of gold and copper properties.
For the second quarter of 2024, Centerra Gold reported strong earnings with a net income of US$37.67 million, a significant improvement from the previous year’s net loss. The company announced a quarterly dividend of CAD 0.07 per share. Although Centerra Gold’s dividend yield stands at 3%, which is below the average yield of leading Canadian dividend payers, its dividend payments are well-covered by earnings and cash flows, with low payout ratios. However, its dividend history has been somewhat unstable.
PHX Energy Services (TSX:PHX)
PHX Energy Services Corp., with a market capitalization of CA$467.55 million, specializes in horizontal and directional drilling services and the rental and sale of performance drilling motors and equipment. The company operates across Canada, the United States, Albania, the Middle East, and other regions.
PHX Energy Services has announced a quarterly dividend of C$0.20 per share, with an impressive dividend yield of 8.1%. Despite this high yield, the dividend payout is not well-covered by free cash flows, with a cash payout ratio of 138.2%. The company’s dividend history has shown volatility, with significant annual drops. The financial performance for the first quarter of 2024 indicated a slight increase in sales but a decrease in net income, raising concerns about the sustainability of future dividend payments.
Russel Metals (TSX:RUS)
Russel Metals Inc., a metal distribution and processing company with a market capitalization of CA$2.26 billion, operates primarily in Canada and the United States. The company generates revenue through its Metals Service Centers, Energy Field Stores, and Steel Distributors segments.
Russel Metals recently declared a dividend of C$0.42 per share. Despite a decline in sales and net income for the second quarter of 2024, the company maintains a consistent dividend history. The dividend yield is 4.4%, and the payments are well-covered by both earnings and cash flows, with payout ratios indicating sustainability despite recent financial performance fluctuations.
Each of these companies demonstrates different characteristics and performance metrics in the context of dividend payments, reflecting the diversity in approaches and financial health among dividend-paying stocks in the Canadian market.
