A Yield to Caution

Article Excerpt

HIGH LINER FOODS INC. $8.42 (Toronto symbol HLF; Shares outstanding: 33.4 million; Market cap: $281.2 million; Dividend yield: 6.9%; www.highlinerfoods.com) processes and markets frozen seafood throughout the U.S., Canada and Mexico. The company sells its products in grocery stores under the High Liner and Fisher Boy brands, among others. It also sells food to restaurants and institutions, and supplies private-label seafood to grocery stores. High Liner pays a quarterly dividend of $0.145. That gives it a very high 6.9% yield. Seafood demand is rising with the growing number of middle-class consumers around the world and the general shift toward healthier diets. That’s good for High Liner, although the company does face significant competition from major global firms. High Liner continues to grow by acquisition, and that adds risk. Its sizable debt—now at $335.9 million U.S., or a very high 1.6 times its market cap—is also a big risk factor. Another challenge relates to the potential for tariffs as the U.S. and China remain locked in a trade dispute…

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