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In September 2024, the Canadian market has shown notable recovery from August’s volatility, supported by a resilient economy and positive earnings growth. As inflation eases and potential interest rate cuts are on the horizon, dividend stocks are increasingly being considered by those seeking stable income and long-term value. Below are three notable TSX-listed dividend stocks that stand out in this sector.
Enghouse Systems (TSX:ENGH)
Company Overview: Enghouse Systems Limited, with a market capitalization of CA$1.60 billion, is a developer of enterprise software solutions through its various subsidiaries. The company operates globally and is known for its robust dividend history.
Revenue Segments: Enghouse Systems derives its revenue from two main segments: the Asset Management Group, which contributes CA$180.88 million, and the Interactive Management Group, which contributes CA$299.55 million.
Dividend Yield: 3.6%
Dividend Details: Enghouse Systems maintains a stable dividend, supported by a payout ratio of 65.7% and a cash payout ratio of 45.8%. Despite a relatively modest yield of 3.6%, the company offers good value compared to peers. The latest Q3 results show revenue growth to CA$130.5 million and net income rising to CA$20.58 million, reflecting strong financial performance that supports its dividend payments.
North West (TSX:NWC)
Company Overview: North West Company Inc., with a market capitalization of CA$2.18 billion, operates retail stores providing food and everyday products in various regions, including northern Canada, rural Alaska, the South Pacific, and the Caribbean.
Revenue Segments: North West generates CA$2.52 billion in revenue from its diverse retail operations.
Dividend Yield: 3.2%
Dividend Details: North West Company recently increased its quarterly dividend to CA$0.40 per share. The company’s dividend is well-covered by earnings, with a payout ratio of 56.2%, and a cash payout ratio of 70.1%. The current yield of 3.2% is lower than some top Canadian dividend payers, but the company has consistently raised dividends over the past decade, showcasing its commitment to returning value to shareholders.
Peyto Exploration & Development (TSX:PEY)
Company Overview: Peyto Exploration & Development Corp. is an energy firm focused on the exploration, development, and production of natural gas, oil, and natural gas liquids in Alberta’s Deep Basin. The company has a market capitalization of CA$2.74 billion.
Revenue Segments: Peyto Exploration & Development generates CA$901.99 million from its exploration and production activities.
Dividend Yield: 9.4%
Dividend Details: Peyto Exploration & Development maintains a high monthly dividend of CA$0.11 per share, offering a yield of 9.4%, placing it among the top dividend payers in Canada. However, the company's high payout ratio of 84.1% and a cash payout ratio of 113.4% indicate that dividends are less well-covered by earnings and free cash flows. Despite increased production and revenue growth to CA$256.55 million in Q2 2024, the decline in net income year-over-year highlights potential volatility for those seeking stable returns.
