A Secure 4.5% Yield? Right here’s What I’d Search for

An enormous yield can really feel like a present, however it often comes with a catch, and a 4.5% yield can as nicely. The very first thing I search for is easy: can the enterprise hold paying it by way of a standard downturn with out “inventive” math? I wish to see actual money technology, a payout that leaves respiratory room, and a stability sheet that doesn’t wobble when charges or volumes shift. So, the place does this dividend inventory match?

THAT.A

Chemtrade Logistics Earnings Fund (TSX:CHE.ONE) sits in a nook of the market that not often will get dinner-party buzz, which generally is a good factor for revenue buyers. It makes and provides industrial chemical substances, with two core segments: sulphur and water chemical substances, and electro-chemicals. The top demand seems boring, however it tends to remain alive even when the financial system cools, as a result of clear water and industrial inputs don’t exit of fashion.

In November 2025, administration talked about document quarterly adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) and raised full-year 2025 steerage to a document stage, whereas noting that international commerce tensions nonetheless lingered within the background. That issues for anybody looking “secure yield,” as a result of it indicators resilience when headlines get loud.

Then, in January 2026, Chemtrade leaned in. It issued 2026 steerage and raised its month-to-month distribution to $0.06 per unit, which provides buyers a cleaner, extra assured revenue sign than a one-off particular payout ever might. It additionally declared the January 2026 distribution at $0.06 per unit, payable on the finish of February, which reinforces that the rise is actual and already in movement.

Into earnings

The most recent quarter supplies the cash-flow consolation buyers ought to demand. Within the third quarter (Q3) of 2025, Chemtrade reported income of $532.8 million and adjusted EBITDA of $151.2 million, each greater than the prior yr. Much more telling for revenue buyers, distributable money after upkeep capital expenditures got here in at $77.8 million, or $0.69 per unit, up meaningfully yr over yr. Administration additionally reported a last-12-month payout ratio of 32%, which seems like actual respiratory room.

The 2026 outlook stays constructive, however you wish to learn it the way in which a skeptic would. Chemtrade guided 2026 adjusted EBITDA at $485 million to $525 million, which suggests it expects a powerful run-rate to proceed. On the identical timeit guided greater money curiosity of $65 million to $75 million, so financing prices nonetheless matter even when the enterprise performs. Upkeep capital spending steerage additionally sits at $120 million to $150 million, which reminds you this isn’t a “set it and neglect it” bond substitute. It nonetheless wants ongoing funding to maintain property wholesome.

Valuation comes all the way down to what you imagine about sturdiness by way of a chemical cycle. On one hand, the distribution enhance and the latest money protection make the payout really feel sturdier than lots of headline yields. However, Chemtrade’s earnings can transfer with pricing for merchandise like caustic soda, chlorine, and sulphur-related inputs, plus overseas trade. Even in Q3 2025, administration flagged the impression of forex strikes on outcomes, and company prices rose yr over yr due partially to incentive compensation and acquisition-related authorized prices.

Backside line

So, might this dividend inventory be a purchase for others? It might, if what you actually need is a month-to-month paycheque backed by bettering money technology and a administration group that has been elevating steerage and distributions, not simply speaking about it. And proper now, right here’s what that dividend might herald from a $7,000 funding.

Briefly, a “secure” yield often begins with protection and stability sheet power, and Chemtrade has been constructing each in a approach that deserves a critical look.