Good to read Oil continues to whipsaw wildly with energy markets reacting sharply to every piece of good and bad news that emerges. While the North American benchmark West Texas Intermediate (WTI) has lost 28% over the last year, it shouldn’t deter investors from adding quality energy stocks to their portfolios. Some Canadian energy stocks now offer juicy yields, which in some cases, are in excess of double digits. Let’s take a closer look at three energy stocks with massive dividend yields that every investor should consider adding to their portfolios.
Globally diversified assets
After losing a whopping 54% over the last year. Vermilion Energy (TSX:VET)(NYSE:VET) has a dividend yielding in excess of 14%, leading to considerable speculation that it is not sustainable. The driller owns a globally diversified portfolio of oil and gas assets with proven and probable reserves totalling 488 million barrels.
Vermilion has established a strategy aimed at mitigating the impact of weaker oil on its financial performance, where it has hedged 39% of its 2019 production to protect its earnings. The company has a long history of growing its oil production; for the second quarter 2019, production was 28% greater than a year earlier. That gave funds from operations a healthy boost, which rose by 14% year over year.
Growing oil output, along with Vermilion’s focus on reducing costs and hedging program, will protect its generous dividend and monster double-digit yield. Its sustainability is further emphasized by the driller’s projected total payout ratio, including capital expenditures, of 101% for 2019 at an average WTI price of US$57 per barrel. The payment appears covered for the short term, even if WTI falls to under US$50 per barrel.