Cardinal Energy Ltd (Alberta) T.CJ

Total return, not just dividend return

[riski]

I think where a lot of investors in CJ get hung up is on the dividend and why the stock price isn't way higher when the dividend is 85 plus. The reality is that many companies are providing great returns right now, it's just that most of them are not doing it all as a dividend. 

Total return is growth, share buyback, debt reduction, and dividends. All of these together are what create shareholder value.

Just because CJ pays a high dividend does not mean they are providing a high total return. In fact, their total return is low by most CAD O&G companies right now. That's because their CFPS is on the lower side relative to others. So maybe they think if they put most of their return into dividends that they will attract investors. But the market is more sophisticated than that. It ends up attracting a lot of retail which drives the price up, but the big money who know how to analyze total return on an investment take their money out of a relatively* overpriced stock like CJ and put it into something providing a higher return on capital. 

This is a good example of how professional investors make money on the backs of retail.

*I say relatively because all O&G companies are undervalued relative to traditional value measures using multiple of earnings. So CJ is overpriced relative to peers, but undervalued in general along with the rest of the industry. I am unsure if this is ever going to correct as oil is now the bad boy of the investment world. The tabacco of the 2020s. Eventually, the amount of cash being generated by these companies cannot be ignored and all should go up. Others will do better than CJ from current valuation.

[CJInvestor]

I don't buy what you're selling. If you look at total returns of CJ vs almost any other small or mid cap stock, it's leaps and bounds ahead over 12 months or even year to date. A whitecap type stock is around 68 percent stock return plus dividend for 12 months. Cj is 120 percent over the same time plus double the dividend.   Compare over time to get a better total picture unless

[Luckyeleven]

Not really true what you are saying. BTE VET CR GTE ATH OBE and others have had better capital returns. CJ is trading to a premium to some like the poster said. BNE for instance should be trading double the price it is now if trading at the same valuation as CJ. Now saying that CJ is still good value here but keep it real. Also management at CJ is always milking all they can. 

[odinburnz]

lucky do you mean BTE?

[Luckyeleven]

Yeah BTE is one that has outperformed CJ, there is others i didn't mention as well like SGY, IPO NVA as well. 

[CJInvestor]

Vet and bte have triple the market cap as cj. Gte and Ath are closer to cj and have had very similar 1 year performances 150 percent to CJs 120. So I still maintain we are doing quite well--all things considered. 

[Luckyeleven]

Nit saying it hasn't done well but that's not what you posted. Market cap doesn't really matter but whatever many energy stocks have outperformed CJ. The reason those two have a large market cap now has been due to their peformance. Anway it is what it is but CJ has been lagging lately but so has some others like BNE AAV off the top of my head. quote=CJInvestor]Vet and bte have

[Re1ndeer2]

Small balancing act between Div and Buybacks,   appears next announcement will be more buybacks...Patience

[Luckyeleven]

Not worried just how it goes with all stocks. Probably just some cosolidation going on here for now. I think it is trading a premium to some others but hey nothing wrong with this company. CJ seems to buck the sector on many days up or down so today just one of those days. I trade and own many energy stocks and just bought CJ a couple of days ago as it's been a laggard, this will pass.

[Winnipeg40]

Too simplistic valuation models being used.  RLI and drilling locations in PDP areas are all part of the calculus sophisticated investors use.  If you take a look at the whole picture, say as to why BTE has outperformed, is that it was far more highly levered to rising prices as it was so heavily leveraged.  Cardinal is not rising as much as it had a run as its debt profile improved

[TheWokeLemming]

What timeline are you using?  About 14 months ago CJ was sitting at $3 and has more than tripled that at points already.   Then add in the dividends and it's even further ahead.   My opinion only.  

[Luckyeleven]

Just 52wk lows and where they are trading today. Nothing wrong with CJ's performance but to say it's leaps and bounds ahead of almost all is not correct. Not bashing or down on the stock at all but just wanting to keep it real.

[sclarda]

riski wrote   I think where a lot of investors in CJ get hung up is on the dividend and why the stock price isn't way higher when the dividend is 85 plus. The reality is that many companies are providing great returns right now, it's just that most of them are not doing it all as a dividend.  Total return is growth, share buyback, debt reduction, and dividends. All of these

[CJInvestor]

Well said. 

[Moremoney4u]

GREAT POST. CJ is a GEM. ERIC HAD VERY HIGH PRAISES FOR  all the right things that CJ is doing. The dividend is amazing,and all the other metrics are STELLAR. I would not be surprised if we acquire another producer shortly. The dividend will again be increased in the new year, and the stock price will rise accordingly. LOAD UP THE TRUCK.

[riski]

Not most, but a lot of their FCF goes to dividends. There are better ways to increase shareholder value. From the shareholder's perspective, 20%-35% of that dividend (depending on tax bracket) goes straight to the government every single year. Why do you want your shareholder returns to be taxed every year? Get out a spreadsheet and see how damaging that is to longterm wealth. But let's

[MohelJFox]

A lot of assumptions to digest there. One being I don't pay tax on any dividends. Not to hard to figure out how. The day that the TSX announces their in the top 30 performing stocks, apparently that's not good enough? A Gic may be locked in, but I'm sure the consensus here is in 1 years time this will be in a different place, and I'm not talking lower. Maybe think of the dividend

[TheWokeLemming]

A GIC?   Is this the Comedy Club?   CJs divvy is over 50% better in the example given and somehow riski tries to make it a bad thing in comparison.  I'll take the divvy and the upside coming when CJ runs over $12.  The SPR has 6 weeks more to go so load up while you can.  

[riski]

That's just it. When a company pays out this much of its free cash as a dividend, that is the return. It's not possible to create much shareholder value/capital appreciation if money is not being invested in the business, buying shares, or paying off debt. Enjoy your dividend. Don't expect the share price to go anywhere fast.  I don't invest in O&G for dividends. There

[sclarda]

riski wrote Not most, but a lot of their FCF goes to dividends. There are better ways to increase shareholder value. From the shareholder's perspective, 20%-35% of that dividend (depending on tax bracket) goes straight to the government every single year. Why do you want your shareholder returns to be taxed every year? Get out a spreadsheet and see how damaging that is to longterm wealth

[riski]

Sorry if I've upset you. That was not my intention.  I think you make some good points. Debt free status should not be underestimated. You are absolutely right that the names I am thinking of that will have much greater return also have higher debt. This is not rocket science. In a bull market, the leveraged names will give the greatest return as they delever and risk decreases. 

[mckayk3]

Less upside?  CJ is a money printing machine and the only pocket left to pay is the shareholder.

[sclarda]

mckayk3 wrote Less upside?  CJ is a money printing machine and the only pocket left to pay is the shareholder. ----------------------------------- Yes our little buddy can see the future absolutely. Either that or he is a bit of a self important pompous ar@se which is my guess. If he can see the future so clearly i wonder why he wastes his time on these boards as he must be a billionaire

[mckayk3]

I know right?  I honestly enjoy seeing the share price go down since it just means more NICB.  Less shares = more money for my/your pocket down the road :)

[Sammy9]

Pompous , who you talking about S. the oracle of a few years ago who posted he had his entire portfolio in HOT and VET. real diversification , but he was getting such great dividends , till he didnt. Then he decided to create bad boy moron ONETRUEKING. Yes thats our real Oracle of SH.

[NelsonLords]

  What does this have to do with CJ ?

[sweetMolly1]

[sweetMolly1]

  Please keep your posts about CJ or at least troll somewhere else, thanks

[Jtpatrol1]