high dividend

Medical Facilities Corp., $15.06, symbol DR on Toronto (Shares outstanding: 31.4 million; Market cap: $470.9 million, www.medicalfacilitiescorp.ca), owns majority interests in five specialty surgical hospitals in South Dakota and Oklahoma, as well as an ambulatory surgery centre in California. The specialty hospitals perform scheduled surgical, imaging and diagnostic procedures. Their revenue comes from fees they charge for the use of their facilities. The ambulatory surgery center specializes in outpatient surgical procedures. Patients typically stay in this facility for less than 24 hours. In the three months ended March 31, 2013, Medical Facilities’ revenue rose 23.7%, to $72.9 million from $58.9 million a year earlier (all figures except share price and market cap in U.S. dollars). The gain mostly came from the company’s fifth hospital; it bought a 51% interest in the Arkansas Surgical Hospital, in Little Rock, Arkansas, for $36.7 million in November 2012. Cash flow per share fell 11.4%, to $0.31 from $0.35....

MCCOY CORP. (Toronto symbol MCB; www.mccoyglobal.com) operates through two divisions: Mobile Solutions and Energy Products and Services....

Automodular Corp., $2.97, symbol AM on Toronto (Shares outstanding: 20.2 million; Market cap: $60.0 million; www.automodular.com), assembles car and truck components, such as instrument panels, engines and rear suspensions. The company operates two plants in Oakville, Ontario, that assemble components for its one remaining automotive customer: Ford Motor Company’s Oakville Assembly Plant. Automodular closed its plant in Oshawa in 2010 after it lost its contracts with General Motors of Canada, which switched to a U.S. supplier after Automodular refused to sharply cut its prices. These deals, under which Automodular supplied parts for the Camaro sports car, accounted for roughly 20% of its business....

Norbord, $33.28, symbol NBD on Toronto (Shares outstanding: 52.2 million; Market cap: $1.8 billion; www.norbord.com), is one of the world’s largest producers of oriented strand board (OSB). The company can produce more than 5.1 billion square feet of OSB at 13 plants in North America and Europe. Brookfield Asset Management (Toronto symbol BAM) owns 59% of Norbord. OSB is an engineered wood-panel product that’s used as a plywood replacement in home construction and manufacturing. The company also produces particleboard, medium density fibreboard and other engineered wood products. In the three months ended December 31, 2012, Norbord’s revenue rose 44.3%, to $365 million from $253 million a year earlier. (All figures except share price and market cap in U.S. dollars.) Earnings rose to $67 million, or $1.51 a share, from break-even, or nil per share....

Growth by acquisition can be risky, as newly purchased companies may develop unforeseen problems, especially in an unsettled economy. However, Veresen aims to cut that risk by adding plants with long-term contracts already in place.

VERESEN (Toronto symbol VSN; www.vereseninc.com) owns pipelines, power plants and gas processing facilities across North America. A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Enbridge (Toronto symbol ENB) owns the other 50%....

ENERPLUS CORP. $13.64 (Toronto symbol ERF; Shares outstanding: 198.2 million; Market cap: $2.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.9%) produces an average of 85,490 barrels of oil equivalent per day (weighted 51% to gas and 49% to oil). Its properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia.

In the three months ended December 31, 2012, Enerplus’s cash flow per share rose 16.1%, to $1.01 from $0.87 a year earlier. Gas prices fell 11.7%, but that was offset by a 10.7% production increase and lower operating costs.

The company’s shares now yield a very high 7.9%. Enerplus plans to cut its 2013 exploration and development budget by 19.7%, to $685 million from $853 million in 2012. The reduction will slow the company’s production growth, but it will help it maintain its high dividend.
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The long-term outlook for oil and natural gas is positive, although in the short term, shale oil and gas discoveries continue to rapidly increase supply. That’s keeping prices low—and pushing down the shares of producers. We advise against overindulging in any one sector. However, we do think most safety-conscious investors should stick with the energy stocks we rate as buys in Canadian Wealth Advisor. Here is our latest advice on two of them....

The long-term outlook for oil and natural gas is positive, although in the short term, shale oil and gas discoveries continue to rapidly increase supply. That’s keeping prices low—and pushing down the shares of producers.

We advise against overindulging in any one sector....

If you stick to dividend-paying stocks, you’ll avoid most of the market’s greatest disasters. That’s because a history of dividends says a good deal about a company’s long-term soundness and stability. Investors generally look to more conservative stocks, like banks and utilities, for income, and to more aggressive stocks for capital gains. Yet there are a number of aggressive stocks that also pay a regular dividend. Some even have dividend yields that are as high—or even higher—than yields on more established companies....

In our first Inner Circle question of the week (see below), a member asks if Torstar is a “screaming buy” or a “value trap”. I don’t think either label fits. You might say the meaning of “screaming buy” is different for every investor. Some use it when they think a stock is virtually certain to go way up in a hurry when the stock market comes to its senses. A stock may seem like a screaming buy to some investors if it has gone up a great deal on good news, and the good news seems likely to continue. It may also seem like a screaming buy if it has dropped a great deal, and the drop seems out of proportion to whatever bad news seems to have caused the drop. Successful investors use the term “screaming buy” rarely—every few years, if that. That’s because they’ve learned from experience that in the stock market, things are never certain. That’s why we always advise you to build a balanced, diversified portfolio of high-quality stocks. (That’s why we advise against investing heavily in our #1 Stock of the Year selections, for that matter.)...