RE:Biggest risk is not what the market is thinking12% yield isn't all that unusual...sure in the last few years it is..but when I was young...lol Remember the days of income trusts I was buying Acclaim AE.un paid me 18% yield. .they were higher back then as investors demanded a greater yield to compensate for the volatility of energy prices. Then companies discovered sustainable payout ratio's below 100% and hedging!
As for the dividend cut people are talking about, if you checked my budget in 2019, and the base case is basically current strip prices (Q1 2018 numbers are similar to what strip is trading at for reference), they will have a $29 million surplus...>Even if oil prices plunge $5 on strip they still have a $4 million surplus.
And then there are still bullets left in the chamber. For example they could put another royalty package and rake in $80 million. People buy these stocks for the dividend. You won't be interested in owning CJ and boring old oil assets if you don't get a return for your money. The dividend won't be cut unless something dramatic happens like 2008 style economic collapse. And in that scenario anything you own will plunge and be worthless including cash with the ensuing inflation that would be unleashed by money printing.