- Mid-cap stocks often offer a higher degree of stability as compared to penny or small-cap stocks
- The stock price of one of these mid-cap companies expanded by 362 per cent over the past year
- The consistency in the payment of dividends, proven business model, and positive profitability ratios are some of the features to look at
Every investor has their own style of investing, and hence the type of stocks they wish to invest in also varies. Some prefer value stocks, whereas some prefer undervalued stocks. There is another class of category of stocks referred to as mid-cap.
It differs in terms of its market capitalization. The market cap ranges from C$ 2 billion to around C$ 10 billion to put a ballpark figure. Hence it is placed somewhere between large-cap and small-cap stocks.
The mid-cap companies tend to handle market volatility better than penny or small-cap stocks. These companies have a proven and stable business model, thereby offering investors higher returns and profitability as compared to penny or small stocks companies.
In this context, let us explore some dividend-paying Canadian mid-cap companies that can be added to the portfolio.
- Winpak Ltd (TSX: WPK)
The company is in the business of selling packing materials and machines used for perishable products and medical devices. Winpak derives most of its revenue from Canada and the US.
The investors of Winpak were paid a quarterly dividend of C$ 0.03 apiece on July 9, 2021. The dividends grew at a rate of 7.72 per cent in the last three years.
Stocks of this mid-cap company closed at C$ 43.02 on August 19, 2021. The stock price expanded by 16 per cent in the last six months and by 10 per cent over the previous nine months.
Winpak posted revenue of US$ 0.24 million in the second quarter of fiscal 2021, up from US$ 0.21 million in Q2 FY20. Its net income was US$ 0.03 million in the same quarter. As per the management commentary, the pandemic impacted the sales volumes in Q2 FY21.
The company holds a market cap of C$ 2.79 billion, the earnings per share (EPS) was 2.03 and the return on equity (ROE) was 9.87 per cent.
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- Goeasy Ltd (TSX: GSY)
Goeasy provides merchandise leasing and financing options for appliances, electronic products, household furnishing, etc. The customer can avail of this financing facility and apply for unsecured loans.
This financial service firm is set to pay its investors quarterly dividends of C$ 0.66 apiece on October 8, 2021. The dividend yield was 1.44 per cent on August 19, 2021.
The stock price stood at C$ 180.01 at market close on August 19, and, on this day, the stocks traded nearly 210 per cent above their 52-week low of C$ 58.16 (September 24, 2020).
Over the past year, the stock price of Goeasy returned a whopping 165 per cent.
Goeasy posted revenue of C$ 202 million in Q2 FY21, up 34 per cent Year-Over-Year (YoY). Its adjusted net income was C$ 43.7 million in the same quarter.
The quarter marked an increase in loan origination and consumer lending. The loan origination was 122 per cent YOY in Q2 FY21.
Goeasy held an EPS of 14.07, ROE of 39.19 per cent and return on assets (ROA) of 11.37 per cent
- Stelco Holdings Inc (TSX: STLC)
This C$ 3.78 billion market cap company produces and sells steel used in multiple sectors like appliances, energy, tube, construction, etc. Stelco held an EPS of 3.91, ROE of 61.65 per cent, and the price-to-earnings (P/E) ratio was 10.9 on August 19.
The stock price of this steel company closed at C$ 42.64 on August 19, which traded nearly 16 per cent below its 52-week high of C$ 50.49 (August 13, 2021).
Stocks of Stelco expanded by 166 per cent in the last nine months, whereas it rocketed by nearly 362 per cent over the past year.
The company is expected to pay its investors a quarterly dividend of C$ 0.20 on August 31, 2021.
Stelco Holdings posted revenue of C$ 918 million in Q2 FY21, increasing by 123 per cent YOY. Its adjusted EBITDA was C$ 410 million, and its adjusted net income was C$ 380 million in the same quarter.
The senior leadership of Stelco commented that the ongoing construction of a 65-megawatt electricity project will reduce CO2 levels. The project is expected to be commissioned in FY2022.
- Canadian Western Bank (TSX: CWB)
This C$ 2.98 billion market cap bank has diversified business verticals offering services like wealth management, commercial banking, real estate financing, etc. The client base ranges from small to mid-sized companies.
The bank paid its investors quarterly dividends of C$ 0.29 per share on June 24, 2021. These dividends had a dividend yield of 3.34 per cent. On average, the five-year dividend growth rate stands at 5.27.
Stocks of Canadian Western Bank closed at C$ 34.21 on August 19. On this day, these stocks were trading roughly 44 per cent above their 52-week low of C$ 23.69 (August 21, 2020). Over the past year, the stock price surged up by 42 per cent.
Canadian Western Bank posted total revenue of C$ 247.1 in Q2 FY21, up by 15 per cent YOY. Its net income available to shareholders was C$ 72 million in the same quarter. The loan revenue increased by 10 per cent YOY in Ontario and was up seven per cent YOY in total in Q2 FY2021.
The bank held an EPS of 3.18, P/B of 1.06, and ROE of 10.17 per cent on August 19.
- Premium Brands Holdings Corporation (TSX: PBH)
The TMX group recognized Premium Brands as one of the top consumer goods companies. This consumer goods company manufactures specialty food and distributes premium food across regions like Washington, Alberta, Nevada, etc. Premium Brands raised its initial public offer (IPO) and debuted in the Toronto Stock Exchange on July 27, 2005.
At the market’s close on August 19, the stocks of Premium Brands were priced at C$ 129.34. On August 10, 2021, it reached its 52-week market high of C$ 132.88.
On a year-to-date (YTD) basis, the stock expanded by close to 31 per cent. However, over the past year, it returned roughly 33 per cent.
This consumer goods company is expected to pay a quarterly dividend of C$ 0.635 on October 15, 2021. The dividends grew at 10.12 per cent on a five-year average.
Premium Brands posted a record revenue of C$ 1.2 billion in Q2 FY21, an increase of 26.4 per cent YOY. Its adjusted EBITDA was C$ 112.2 million, whereas its earnings were C$ 28 million in the same quarter.
The company acquired Mermax, a food processing company based in Quebec, during the quarter.
The consumer goods scrip held an EPS of 2.55, ROE of 8.02 per cent, and ROA of 3.02 per cent.
- Cargojet Inc. (TSX: CJT)
This C$ 3.31 billion market cap company is a domestic cargo operator managing cargo load in 14 Canadian cities. Cargojet also transports international cargo between Canada, Bermuda, the US, and Germany.
The company investors are expecting to earn quarterly dividends of C$ 0.26 on October 5, 2021.
The stock price of this transportation company was trading roughly 23 per cent below its 52-week high of C$ 250.01 (November 9, 2020) and closed at C$ 185.11 on August 19.
Over the past year, the stock price only increased by four per cent. However, on a year-to-date (YTD) basis, it dipped by nearly 11 per cent.
Cargojet Inc posted a total revenue of C$ 172.1 million in Q2 FY21, down from C$ 196.1 million in Q2 FY20. Its adjusted free cash flow was C$ 36 million in the same quarter.
The company benefitted from a one-time revenue earned for procuring PPE from China to Canada. Cargojet posted an ROE of 9.14 per cent, a debt to equity (D/E) ratio of 0.71, and an EPS of 2.09.
- AltaGas Ltd (TSX: ALA)
The company extracts and distributes natural gas across North America. The customers of AltaGas are based in Canada and the US. The company is scheduled to pay the following monthly dividend of C$ 0.083 on September 15, 2021.
At the market’s close, stocks of ALA were priced at C$ 24.89 on August 19. On this day, the stocks traded 60 per cent above their 52-week low of C$ 15.53 (October 2, 2020).
The stock price spiked up by roughly 38 per cent in the last nine months, but on a YTD basis, it expanded by nearly to 33 per cent.
AltaGas posted a normalized EBITDA of C$ 230 million in Q2 FY21, up from C$ 206 million in Q2 FY20. The quarter was driven by global exports, increasing gas processing volumes by 12 per cent YOY.
The oil and gas scrip held a P/E ratio of 19.2, ROE of 6.05 per cent on August 19.
- Labrador Iron Ore Royalty Corporation (TSX: LIF)
This company held a market cap of C$ 2.66 billion and outstanding shares of 64 million on August 19. The company paid a quarterly dividend of C$ 1.75 per share on July 26. 2021.
On June 23, 2021, stocks of Labrador reached their 52-week high of C$ 50.45 and closed at C$ 41.57 on August 19.
The stock price returned nearly 47 per cent in the past year, but on a YTD basis, it expanded by roughly 27 per cent.
Labrador Iron Ore Royalty Corporation posted royalty revenue of C$ 79.2 million in Q2 FY21, up from C$ 46.7 million in Q2 FY20. Its net income was C$ 110.2 million in the same quarter.
This steel scrip posted an ROE of 56.08 per cent, ROA of 40.56 per cent, and an EPS of 5.13 on August 19.
Though the mid-cap companies offer a better return and liquidity than penny and small-cap stocks, mid-cap stocks come with their own set of risks that an investor needs to consider before investing.