PHX Energy Services and two other companies to consider

As the U.S. presidential campaign unfolds, discussions around government debt, Federal Reserve policies and trade are poised to influence market sentiment and economic conditions. These broader economic factors are critical when considering investing in dividend stocks on the TSX, as they offer potential stability in an environment of fiscal and trade uncertainty.

Top 10 Dividend Stocks in Canada

Click here to see the full list of 34 stocks in our TSX Top Dividend Stocks Analysis tool.

Let’s explore several notable options among the screener results.

Simply Wall St Dividend Rating: ★★★★☆☆

Preview: PHX Energy Services Corp. provides horizontal and directional drilling services, as well as rentals and sales of high-performance drilling engines and equipment to oil and gas companies in Canada, the United States, Albania, the Middle East and around the world, with a market capitalization of C$485.48 million.

Operations: PHX Energy Services Corp. generates CAD 656.44 million from its horizontal oil and natural gas well drilling services.

Dividend yield: 7.8%

PHX Energy Services offers a dividend yield of 7.78%, ranking among the top 25% of Canadian dividend payers, but its sustainability is questionable as dividends are not well covered by free cash flow or earnings, with a high cash payout ratio of 138.2%. Despite historically increasing dividends over the past decade, payouts have been volatile. PHX recently declared a quarterly dividend of C$0.20 per share payable on July 15, 2024, affirming its commitment to returning value to shareholders amid financial challenges indicated by an average earnings decline of 4.3% per year over the next three years and recent disappointing quarterly results, with net income falling from C$22.42 million to C$17.45 million year-over-year.

Simply Wall St Dividend Rating: ★★★★★☆

The story continues

Preview: Russel Metals Inc. is a metals distribution and processing company operating in Canada and the United States, with a market capitalization of approximately CA$2.26 billion.

Operations: Russel Metals Inc. generates its revenues primarily from three segments: Metal Service Centers (CA$2.95 billion), Power Generation Stores (CA$982.20 million) and Steel Distributors (CA$429 million).

Dividend yield: 4.4%

Russel Metals maintains a stable dividend profile, with a 10-year history of reliable and growing payments. The dividend, which yields 4.38%, is supported by a low payout ratio (40.3%) and cash flow (31.4%), indicating sustainability despite yielding below the top quartile of the Canadian market (6.41%). Recent developments include a dividend increase of 5% to C$0.42 per share and a pending acquisition expected to close in the third quarter of 2024, which could impact future financial stability.

Simply Wall St Dividend Rating: ★★★★☆☆

Preview: Suncor Energy Inc. is an integrated energy company with operations in Canada, the United States and internationally, with a market capitalization of approximately C$68.14 billion.

Operations: Suncor Energy’s revenues are primarily derived from its oil sands business, which generates C$23.76 billion, and its refining and marketing operations, which contribute C$31.51 billion, as well as a more modest contribution of C$2.17 billion from exploration and production.

Dividend yield: 4.1%

Suncor Energy has had a mixed dividend record, displaying both growth and volatility over the past decade. While the company trades 48% below its estimated fair value and is well aligned with industry valuations, there are concerns about its volatile dividend and low 4.1% yield, placing it below major Canadian dividend payers. Dividends are supported by a sustainable earnings payout ratio (35.2%) and cash flow (35%). However, earnings are expected to decline by an average of 9.3% per year over the next three years, which could pose challenges for maintaining its dividend levels.

Take (the) advantage

• Get started on your investing journey with our picks for the 34 best dividend stocks on the TSX here.

• Got an interest in these stocks? Improve the way you manage them using the Simply Wall St portfolio, where intuitive tools await to help you optimize your investment results.

• Enhance your portfolio with Simply Wall St, the ultimate app for investors looking for global market coverage.

Looking for other investments?

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

Companies discussed in this article include TSX:PHX, TSX:RUS and TSX:SU.

Do you have any comments on this article? Are you concerned about its content? Contact us directly. You can also send an email to [email protected]