This first appeared as 1 of 3 top Canadian dividend ideas for October 2017 in the Seeking Alpha Marketplace service DGI Across North America.
Altagas’s (TSX:ALA) share price surely looks like it’s turning around after management hiked its dividend for December. Specifically, the dividend increase was nearly 4.3%. That doesn’t sound much until you hear that the company now offers a ~7.5% yield.
Don’t be spooked by Altagas’s big yield, though.
Is Altagas’s Dividend Safe?
The company is working on a big acquisition, which requires lots of resources. It also plans to sell some of its assets to fund the acquisition. By investing in internal projects, at least some of the lost cash flow will be replenished.
Altagas is devoted to paying out 50-60% of its cash flow as the dividend. Moreover, the dividend is largely backed by long-term contracted cash flow. Altagas’s investment-grade balance sheet also helps.
Altogether, Altagas should be able to maintain its dividend.