Richards Packaging Income Fund

RPI.UN-T

One of the least celebrated but one of the most important businesses in Canada because it is the largest packaging company. Trade at an attractive multiple. The payout ratio is almost 60%.

A very steady packaging and distribution business. The payout ratio is lower than 50% and they have targeted higher than that. There should not be much impact from the NAFTA negotiations.

This is the kind of business that investors should own in this time in the market. It pays a nice dividend. It is nicely diversified in terms of the types of packaging. Products are well-suited to consumer staples, which aren’t as sensitive to the market cycle. Management owns a large stake in the company. He think it is a good long-term hold.

He likes this. In the consumer staples space, so it is a stable type of company and you can expect it to grow with GDP. His main concern is liquidity. It can be illiquid at times and you need to be careful of your position sizing. Prefers CCL Industries (CCL.B-T), but if it is income you are looking for, this one is fine.

(Top Pick May 18/17, Down 3.63%) The decline is just trading noise. He still likes the company. He would hold it for sure.

(Top Pick Feb 28/17, Up 25%) It is still not overvalued. They generate a lot of cash flow and you get a 4.5% dividend which represents about a 50% payout. They have a huge runway to make acquisitions in North America. It is still one of his favourite names.

Glass and plastic packaging. Does a lot of pharmaceutical type packaging. This has had 13 years of 25%+ return on invested capital. A really strong balance sheet.

A very stable stock. Distributes rigid packaging products. They have 3 main end markets; food packaging, cosmetics and healthcare like pill bottles. Very stable. They generate a ton of free cash flow. 10% free cash flow yield and are paying out only half of that as a dividend. Dividend yield of 4.64%.

This is on his radar screen. They have been consolidating over the last little while, and he would like to see the stock show some technical strength i.e. moving out of that consolidation phase beyond $25-$26 on above average volume. A good position for somebody income oriented.

(Market Call Minute.) They’ve been able to put up good organic growth numbers, and recently raised its dividend. Kind of a boring company, but in this environment boring can be amazing.

It has been on a tremendous run and he does not think it is going to stop. Management is solid and the balance sheet is solid. They are benefiting from the shift away from physical stores.

This is a tough business. Packaging is a good consumer staples type of business. They do all the things right. Have a good dividend, raise it, and do share buybacks. He just can’t get past the illiquidity. Also, there has been quite a big run up on shares recently. Now trading at multiples that are on par with something like CCL Industries, which is much larger and a much more liquid company, which he would prefer.

(A Top Pick June 12/15. Up 66.05%.) Despite the stock being up, it is probably still no more expensive, from a valuation standpoint, than it was a year ago. Earnings have grown and the cash flow has grown significantly. Have made some acquisitions. Pays a nice dividend. Management owns a significant stake. Dividend yield of 4.4%.

Continues to deliver great results and has a nice sustainable dividend yield. It doesn’t happen very often, but if you see a pullback that is the time to step into this.