Chemtrade’s payout looks safe

Article Excerpt

CHEMTRADE LOGISTICS INCOME FUND $12 (Toronto symbol CHE.UN; High-Growth Payer Portfolio, Manufacturing & Industry sector; Units o/s: 110.4 million; Market cap: $1.3 billion; Divd. yield: 10.0%; Dividend Sustainability Rating: Average; www.chemtradelogistics.com) is one of the largest removal-service providers for resource firms that create acids and sulphur as by-products. The trust converts (and sells) these substances into useful chemicals such as sulphuric acid. The trust recently paid $51 million to settle a class action civil lawsuit for anti-competitive conduct allegations related to its 2014 acquisition of General Chemical. Chemtrade generates annual cash flow of about $145 million, so it’s unlikely that payment will force it cut its monthly distribution of $0.10 a unit; the annual rate of $1.20 yields a high 10.0%. Those distributions total roughly $112 million a year. Chemtrade Logistics is a buy. buy…

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