In 2017, you should focus on high-quality stocks. After all, markets remain volatile. But if you can accept more risk, consider buying stocks we rate ‘Higher Risk’ and ‘Speculative.’ Their size may be the major contributing factor to their quality ratings, but they all pay dividends—and three of them are dividend aristocrats.
Manufacturing stock Richelieu Hardware of Montreal (TSX—RCH) manufactures, imports and distributes specialty hardware, kitchen cabinets and countertops across Canada and the United States. It’s up by 14.6 per cent from last year. Richelieu is expected to earn $1.07 a share in 2016. In 2017, it’s expected to earn $1.20 a share. This dividend aristocrat pays 21 cents a share for a small yield of 0.8 per cent. It remains a buy for long-term share-price gains and growing dividends.
AG Growth International
This farm machinery and equipment manufacturing stock’s shares are up by 88 per cent from last year. In 2016, the firm is expected to earn $2.16 a share. In 2017, its profit is expected to jump to $3.54 a share, for a reasonable multiple of 15.4 times. The long-term outlook for agriculture remains favorable. AG Growth International (TSX—AFN) operates factories in Canada, the U.S., Britain, Brazil and Italy. We expect AG to pay $2.40 a share, for an attractive yield of 4.4 per cent. Its profits will exceed its dividend. AG remains a buy for high dividends and long-term price gains.
Hardwoods Distribution (TSX—HWD) of Vancouver makes hardwood products for houses and buildings. The consumer products stock inched up by only 0.2 per cent from last year. The company is expected to earn $1.22 a share in 2016. In 2017 it’s expected to earn $1.35 a share—up by 10.7 per cent. Hardwoods’ multiple is an attractive 12.9 times. It remains a buy for long-term share price gains and dividends of 25 cents a share, for a yield of 1.4 per cent. It’s a dividend aristocrat.
Intertape Polymer (TSX—ITP) makes plastic packaging for industrial and retail use. In 2016, it’s expected to earn C$1.69 a share. In 2017, Intertape is expected to earn C$1.95 a share for an appealing multiple of 13 times. Its dividend of C$0.74 a share yields a decent 2.9 per cent. This manufacturing stock is a buy this dividend aristocrat for growing dividends and long-term gains.
PFB Corp. (TSX—PFB) of Calgary manufactures insulation building products using expanded polystyrene. The shares slipped by 1.9 per cent from last year. But it raised its dividend to 28 cents a share, for an attractive yield of 3.2 per cent. While feedstock prices have recovered with oil and gas prices, they remain fairly low. We expect this manufacturing stock to earn 76 cents a share in 2016 and 2017, for a multiple of 11.5 times. PFB remains a buy for long-term share-price gains and attractive dividends.
This is an edited version of an article that was originally published for subscribers in the December 2016/Second Report of The MoneyLetter. You can profit from the award-winning advice subscribers receive regularly in The MoneyLetter.
The MoneyLetter, MPL Communications Inc.
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