Westshore Terminals Inc. (WTE-T)

Canada has some of the best high-grade coal for steelmaking, and this company exports it. Permits to build new mines are being held up by environmental concerns. Safe name, good dividend. Even if coal falls off, export capability is still intact. Yield is 6.8%.

De-globalization is an issue, as WTE's port facility is a major route to Asia. But we think on-shoring is mostly for industrial companies, and we are not particularly concerned about commodity shipment declining in volume. WTE has a nice advantage in location, but it should be considered an income, not a growth, stock. Yield is 6.5% and may vary. It has paid three special dividends in the last four years as well (totalling $2.35 per share). The balance sheet is OK but growth is low. EPS for 2025 is expected to be $1.56, slightly less than it was in 2016. We would consider it 'ok' but not really exciting. But for income investors willing to hold a smaller, somewhat cyclical company, we think it would be suitable. 
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WTE operates a coal storage and unloading/loading terminal in British Columbia. The company has contracts to ship coal from mines in British Columbia, Alberta, and the United States. WTE pays a high yield of 5.84%, and has a relatively cheap forward price-to-earnings ratio of 14.9x. The stock price has been essentially flat over the last year with a small decline, while the high yield has created slight gains. Forecasts suggest that WTE will see a decline across EPS and revenue over the next few years. WTE pays out a high percentage of free cash flows in dividends at about 86% over the last twelve months, while also paying out 46% of cash from operations. Debt is moderate and the company has also paid special dividends the last two years and will do so again this year. We think it is an OK income option that has grown it's dividend at nearly a 30% annualized rate over the last three years. Declining results are cause for concern in the future in addition to size risk, but WTE performed well in 2023 displaying top and bottom line growth. It is seeking to ship/load new products to alleviate its dependence on one. 
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Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. A fairly unique company in Canada that is in the shipping and port sector. The stock has done very well this year, and is still cheap. Would be okay to buy here for income investors. Unlock Premium - Try 5i Free

(A Top Pick Oct 25/19, Down 31%) They have been in deep negotiations with TECK.B-T. The market was pricing in a $16 stock for them. This is the base case for this stock. There has been tax loss selling. They are now in negotiations with other bulk commodities companies. He still likes it.

(A Top Pick Jul 26/19, Down 23%) They had some difficulties with TECK.B-T not long after it was a Top Pick. It is still the leading coal export terminal on the west coast. It is a challenge that their largest customer is looking to renegotiate and move volumes elsewhere. It scores in the top 1% on valuation. It still yields over 4% with a low payout ratio and has a solid balance sheet. It is a relatively stable stock relative to other commodity stocks. It is still on his buy list.

(A Top Pick Aug 21/19, Down 27%) He still owns it and still likes it down here for the same reasons. The negative performance is mostly because the market still wants to see a deal between them and TECK.B-T, which seems to be playing a bit of hardball. He would expect that they come back to the table some time this year and formalize an agreement for some tonnage.

Why the selloff today? Teck may be expanding its deal with a competitor causing a sizable share price sell off (over 10% today) -- this may double Teck's capacity. People may also be concerned about future coal demand and exports. There just not seem to be any catalysts to spark his interest. It is not wise to panic on this, there will be time for recovery to allow you to assess the situation.