Dividend-paying shares of companies that are in a "transfer" license can often represent average investment opportunities for knowledgeable players.
This is because – provided that the current dividend is secure, which means that it is firmly supported by strong underlying cash flows and a recurring profit flow – the return on a company's dividend should essentially function as a "floor" that supports the share price.
Regardless of what the market can think of for the prospects of a particular company, a dividend income stream is a very real thing. If the price – or the return – on a security ever deviates too far from what would be considered a reasonable norm, you can invest in that any large investor out there will go in to clear it up.
Here are two very attractive prices but exaggerated dividend shares that trade on the TSX index and another transferred dividend share that investors may want to exercise a little more caution with.
High Liner Foods (TSX: HLF) does not run a glamorous business with any imagination, but the world-famous investor and billionaire Warren Buffett has repeatedly realized how much he prefers to invest in "boring" businesses.
You can find HLF's assortment of processed seafood products in the frozen food treats in the supermarkets across North America under the High Liner, Fisher Boy and Sea Cuisine brands.
Although it has been around 1899, the company is now in the midst of an organizational restructuring, as it works to defend itself against stagnant sales in combination with reduced margins.
But it doesn't make a bad investment of any stretch of the imagination.
In fact, the HLF has on average annual free cash flows of more than $ 30 million in each of the last four years, significantly more than is required to maintain its current dividends, currently providing 2.32 percent per year.
trans ~~ POS = TRUNC (TSX: TCL.A) is Canada's largest printing company and after the transforming acquisition of Coveris Americas last year, it is becoming a formidable player in the North American flexible packaging area.
The shares in TCL currently give 5.99% per annum, as the company's return has increased proportionally to the decline in the value of the share from a full-time high in 2018 which at one point moved over $ 30 per share to where it is currently trading close to its 52 weekly stock declines of $ 14.04.
Although I like the move to move resources away from print media and towards flexible packaging as part of the Coveris acquisition, the fact that it was not a cheap management decision.
TCL owed more than $ 850 million in debt to its balance sheet between 2017 and 2018, and if you agree with the decision or not, it is a change that the market has had difficulty managing.
Nevertheless, this is a company that has regularly managed to generate over $ 200 million in annual free cash flows, significantly more than is needed to fund the current dividend.
cineplex (TSX: CGX) is more of a household name than the mentioned companies.
Cineplex is Canada's largest cinema chain with more than 160 theaters and more than 1650 screens under the Cineplex Odeon, SilverCity, Galaxy Cinemas and Famous Players brands.
Unfortunately for the shareholders, in recent years, it has not exactly been good for film exhibitors, and CGX is no exception.
The company's share price has lost almost half of its value since 2017, including a -6.8% loss since the beginning of 2019.
The theater chains have continued to struggle to attract film actors to their theaters, even though they invested in various initiatives that they had hoped would attract customers and especially the millennial demographics.
In a development that certainly will not affect any further confidence in the sector, America's largest movie exhibitor AMC Entertainment has met its own declines this week, down with double-digit percentages to Thursday's trading activity.
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