Investoid

MoneySense put out an article in their latest issue chronicling the ‘Top 100 Income Stocks’. The list is divided into income trusts and dividend paying stocks, with 50 companies in each section. Here are some interesting picks that receive an ‘A’ grade.

• Canetic Resources Trust (CNE.UN: TSX): this trust had a horrible performance in the past twelve months (down over 23%), but it’s still listed as an ‘A’ income firm and has recovered nicely from its lows due to the Halloween massacre. Despite its lofty 13.3% yield, the company has only an 80% payout ratio and modest debt/equity. This company is 60/40 oil/gas, so some of its weakness is due to the continuing slump in natural gas.
• Mullen Group Income Fund (MTL.UN: TSX): this is an oil & gas services company that focuses on specialized transportation. It currently yields 8.5% and has a relatively low payout ratio of 63%. This is one company that might not be affected by a slowdown in exploration activity, since their transportation business revolves around more than that. I do not know what proportion of their business is related to ongoing activities, but it is another interesting firm.
• Bank of Nova Scotia (BNS: TSX): is my favourite Canadian bank from an investment perspective. It has a solid 3.4% yield, a strong history of dividend growth (19% last ), and the best 5 year return of any of the big banks. They have less drama (read: exotic investment exposure) than CIBC, and a fairly strong retail network. They will undoubtedly experience some weakness in the current interest rate-hike environment, but are a solid long term hold.
• Teck Cominco (TCK.B: TSX): I was surprised that such a cyclical company could be considered a good income play. The company has been a solid performer over the past 5 years, and they have increased their dividend by quite a bit in the past year (58%). They currently yield about 1.9%, which is about average in terms of the income stocks listed. I personally wouldn’t consider this a long term hold, but it could be a solid stock to have while commodities continue their boom.

A lot of the stocks listed are worthy of inspection, particularly if you’re looking at beefing up the income equity position in your portfolio. As you age and get closer to retirement, these types of stocks will take up an increasing amount of your portfolio as your risk tolerance becomes lower and your need for steady returns increases.