Updated on September 13th, 2024 by Felix Martinez
Monthly dividend stocks are highly appealing to individuals such as retirees because they make it significantly easier to budget dividend income against living expenses. We’ve compiled a list of all 78 monthly dividend stocks.
You can download our full Excel spreadsheet of all monthly dividend stocks (along with metrics that matter, like dividend yield and payout ratio) by clicking on the link below:
Superior Plus Corporation (SUUIF) is one such company whose management team has decided to pay a monthly dividend to shareholders. And the company has a substantial dividend yield.
As of today, Superior Plus yields 9.4% – about four times the 1.6% dividend yield of the S&P 500. The high dividend yield and the monthly dividend payments of Superior Plus are two reasons why investors might take interest in this stock.
This article will analyze Superior Plus’s investment prospects in detail to determine whether the company merits consideration for income-oriented investors’ portfolios.
Business Overview
Superior Plus Corporation is a relatively small industrial company but one of the largest propane distributors in North America. The company is the dominant distributor in Canada (30% of EBITDA), has significant operations in the U.S. (60% of EBITDA), and is also a propane wholesaler (10% of EBITDA). Superior Plus generates around $2.5 billion in annual revenues and is based in Toronto, Canada.
The company previously had a large Specialty Chemicals segment but sold this business in 2021 as part of a broader restructuring. Superior Plus is reorganizing its business to become a pure-play distribution company.
Superior Plus’ Energy Distribution segment is involved in the distribution and retail marketing of propane products, fuels (including heating oil and propane gas), and wholesale liquids marketing services. This segment operates primarily in Canada but has been expanding into the United States through a series of acquisitions that began in 2009. The Energy Distribution segment is operated under the trade names ‘Superior Propane’ or ‘Superior Gas Liquids’.
It should be noted that Superior Plus is an international stock – the company trades on the Toronto Stock Exchange under the ticker SPB and reports financials in Canadian dollars. Buying stocks based outside the U.S. presents a number of unique risks, such as currency risk. During rough economic periods, most foreign currencies weaken against the USD, and thus the earnings of international companies in USD decrease. Regardless, all figures in this article have been converted to USD.
On February 21, 2024, Superior Plus released its Q4 and full-year results for the period ending December 31, 2023. The company reported adjusted EBITDA of $160.2 million for the quarter, a 17% increase compared to the previous year. This growth was driven mainly by the acquisition of Certarus and lower corporate costs, although lower EBITDA from the propane distribution segment offset some of the gains.
Net cash flow per share for the quarter was $0.11, but it’s important to note that this quarter typically reflects a slower season for the company. For the full year, net cash flow per share was a much higher $1.59.
Management expects adjusted EBITDA to grow by 5% in 2024. However, considering potential dilution, the forecasted cash flow per share (CFPS) is projected to be around $1.50.
Starting January 1, 2024, Superior Plus will report in U.S. dollars.
Growth Prospects
Like many energy companies, Superior Plus was negatively impacted by the coronavirus pandemic and the resultant recession in the United States. As a result, the company incurred a 26% decrease in its earnings per share, from $1.63 in 2019 to $1.21 in 2020.
However, the company has stabilized its performance in recent quarters.
Source: Investor Presentation
The increase was due to lower Adjusted EBITDA from all three segments following several acquisitions over the past four quarters. Adjusted operating cash flow per share totaled $0.25, compared to $0.45 last year, primarily due to transaction, restructuring, and other costs related to the company’s recent acquisitions, as well as a higher share count.
On the bright side, management introduced its FY2024 outlook, expecting adjusted EBITDA to be around C$499.8, suggesting a 5% increase year-over-year in its midpoint. Accordingly, for the year, we respect CFPS/share of about $1.50, which takes into account the recent dilution and the possibility for more costs to accrue amid further acquisitions.
Source: Investor Presentation
Our CFPS/share estimate implies a year-over-year decrease of 5.7% compared to fiscal 2023.
Competitive Advantages & Recession Performance
As an operator in the energy distribution industry, Superior Plus has competitive advantages, benefiting from regulatory barriers to entry and significant upfront capital outlays to enter the market. Unfortunately, Superior Plus has not proved resilient to all economic environments.
A company showing such outsized earnings-per-share declines can be expected to also cut its dividend when it reports losses. Indeed, Superior Plus cut its dividend twice in 2011. More recently, the company did make it through 2020 without reducing its dividend, a remarkable accomplishment gave the fierce recession caused by the pandemic.
On the other hand, Superior Plus has increased its financial leverage lately. Management has raised its target leverage ratio (Total Debt to Adjusted EBITDA) from 3.0-3.5 to 3.5-4.0 in order to perform more acquisitions. The ratio is elevated right now, standing at 3.8. The increased leverage of Superior Plus has somewhat reduced its resilience to unforeseen downturns.
Dividend Analysis
The dividend yield will likely make up most of the returns of Superior Plus going forward, given the lack of share price growth over the last decade. Superior Plus currently distributes a monthly dividend of $0.18 per share in CAD, or C$0.73 per share annualized. At present exchange rates, this works out to approximately $0.54 per share in U.S. dollars.
The company has distributed the same dividend for several years in a row. U.S. investors need to keep in mind that the company pays its dividend in Canadian currency, which will have an impact on actual capital received based on the fluctuations in exchange rates. Based on an annualized dividend payout of $0.54 per share, Superior stock has a current dividend yield of 9.4%.
Superior Plus is expected to earn $1.50 this year in U.S. dollars, giving the company a projected payout ratio of 35% for 2024. The dividend appears to be safe for the foreseeable future, thanks to the low payout ratio. On the other hand, Superior Plus has not raised its dividend for years and is not expected to in the near future.
As such, we feel that Superior Plus is a risky stock for income investors to hold, particularly during a downturn in commodities or a global recession.
Final Thoughts
The high dividend yield and the monthly dividend payments of Superior Plus help this stock to stand out relative to other dividend investments, particularly for income-focused investors like retirees.
That said, our due diligence reveals that this particular security has an underwhelming track record. Investors should not expect a dividend raise anytime soon.
Moreover, we do not expect material earnings-per-share growth or an expanding valuation multiple, leaving dividends as the primary source of expected returns. Nevertheless, for investors solely interested in income, the stock of Superior Plus could be appealing on that basis.
Don’t miss the resources below for more monthly dividend stock investing research.
- The Monthly Dividend Stocks List
- 20 Highest Yielding Monthly Dividend Stocks
- 10 Cheapest Monthly Dividend Stocks
- 10 Safest Monthly Dividend Stocks
- 3 Top ‘Hold Forever’ Monthly Dividend Stocks
And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.
- Dividend Kings: 50+ years of rising dividends
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- Dividend Aristocrats: 25+ years of rising dividends and in the S&P 500
- Dividend Achievers: 10+ years of rising dividends and in the NASDAQ
- High Dividend Stocks: 4%+ dividend yields
- Blue Chip Stock: Kings, Aristocrats, and Achievers
- MLPs: List of MLPs and more
- REITs: List of REITs and more
- BDCs: List of BDCs and more