With the economy expected to show a slower pace of growth in the next few quarters, investing in companies that have an outsized order backlog makes a lot of sense.
Personally, I like the idea of a company having a few years of business already in the works when the risk of even a mild recession is at hand.
High Yields From New Flyer Industries
Enter New Flyer Industries (NFYIF), a Canadian-based company that’s the largest maker of mass transit buses in North America. It possesses a $3.6 billion backlog of orders, and it will be a central beneficiary of green, urban transit systems.
The company offers the broadest product line in the industry with alternative-fuel drive systems, electric trolleys, gasoline/electric and diesel/electric hybrid vehicles, as well as its proven and reliable diesel buses. Customers include the New York and Chicago Transit Authorities, as well as shuttle buses for airports, car rental agencies, park-and-ride facilities and universities.
This is a very straightforward and transparent business, and right now the mass transit bus industry is in the midst of a strong multi-year cycle.
Income Deposit Security (IDS)
New Flyer is an Income Deposit Security (IDS) whose shares are made up of a debenture and common stock. Its monthly distribution is about 9 cents right now. At its current price of around $8 per share, its current dividend yield is around 15% after adjusting for any Canadian withholding tax and currency exchange.
Mass transit is a must-grow industry in evermore-crowded American cities. And New Flyer is a leader in green and clean fuel systems that are utilized in today’s fight against pollution. Demographic growth in the United States and increased spending by municipalities to improve mass transportation favors an increasing demand for mass transit vehicles and portends a long-term secular market for companies that are benefiting from this growth and demand.
Therefore, I recommend that you buy New Flyer Industries.
