Parkland Income Fund, Canada’s largest independent fuel distributor and marketer, said Friday it is set to convert into a corporation on Dec. 31.
The Red Deer-based company also said it will dole out a monthly dividend of 8.5 cents per share, equivalent to $1.02 per share annually.
Based on its most recent closing stock price of $10.90, Parkland (TSX:PKI.UN) said the implied yield for this dividend level is 9.4 per cent.
On Friday, Parkland’s units rose nearly four per cent to $11.31 on the Toronto Stock Exchange.
“Paying shareholders this monthly dividend strikes a balance between providing an attractive yield for income-oriented investors and investing capital in growth opportunities,” said president and CEO Mike Chorlton.
“Parkland’s business has grown significantly over the past five years and we believe we can maintain a similar growth trajectory as the fuel industry continues to consolidate.”
“This dividend level allows us to continue to execute on our growth plans through a combination of internally generated funds, external debt and equity capital.”
Parkland had been primarily focused on rural markets in Western Canada prior to the $214-million acquisition of privately held Bluewave last December.
In its most recent financial report, for the third quarter, Parkland’s net income plummeted 96 per cent to $400,000, or a penny per unit, from $10 million, or 20 cents per unit, a year earlier.
It attributed the profit decline partly to higher costs — including $9.4 million directly related to the Bluewave deal — but maintained its distributions, saying it expects profits to rebound because half of Bluewave’s earnings are booked in the winter months when it delivers a lot of furnace oil.
Parkland also runs retail and wholesale fuel outlets and convenience stores under the names Fas Gas Plus, Fas Gas, Race Trac Fuels and Short Stop Food Stores. Its Bowden refinery is a storage and contract-processing site.