RE:RE:RE:RE:RE:RE:Nibbler Hey Binkie, I just now picked up on CJ - Cardinal Energy's recent dividend announcement and they look pretty darn good as well (It takes me awhile sometimes, but eventually all dividend paying companies will catch my attention sooner or later).
They are a good example of the other side of the coin. They closed at $9.20 and their book value is only $5.03, but the yield is 6.5% right now. Lots of room for the price to move on this one still (to bring the yield down), once it gets noticed by a few more people, that is. Their 60 cent (per year) dividend is a very conservative start for them at that! They could have easily and sustainably have started with double that amount, imo. So, the potential is there for considerable div hikes in the near future as well! (Once they realize for themselves that they lowballed it.)
For the O&G sector, I would endorse this company as an addition to a YGR holding since they have met my mandatory "good" company criteria of back-to-back annual NAV per share increases:
2020 q1 NAV $2.48
2021 q1 NAV $2.69
2022 q1 NAV $5.03
I don't know if their share price will double in 12 months or not, but they should come pretty close. YGR is still the better candidate in that regard, but one really can't go wrong on CJ either, since you'll at least be getting paid to wait for it ;)
There are a couple others, not quite as good a candidate for near term doubling, but are okay for diversification purposes as well (in the same sector):
CNE - Canacol Energy, closed at $2.75 CAD, book value at $1.11 USD and dividend is 21 Canadian cents per year which yields 7.5%.
Problems with this one, is that it operates entirely out of Colombia (South America) - so there is a bit of regional risk to consider and also the dividend payout is at the maximum possible amount that they can handle, imo. I mean, right on the edge, man...
2020 q1 NAV $1.17 USD
2021 q1 NAV $1.10 USD
2022 q1 NAV $1.11 USD
If they can hold it together, the price should correct as well to bring the dividend in line with the industry average. Just, it might not correct as much as it should though, due to the regional risks involved...
ORC.B - Orca Energy Group, closed at $5.24, book value at $3.91 and dividend is 40 cents per year which yield 7.6%.
One of the rare ones, like YGR, that handled the 2020 crash with ease. The dividend is about the perfect payout amount as well. Not too much, not too little, imo. Problems I see with this one is that it operates entirely out of Tanzania (Africa) - so there is a bit of regional risk to consider and also the company itself is headquartered in the British Virgin Isles. Foreign based companies (non-Canadian, non-USA) freak me out. It's a trustworthiness thing for me. Not having the confidence of knowing for sure if they fudge any numbers or not. So my paranoia would make it a no-go for me. Possibly unwarranted though...
2019 q1 NAV $2.70
2020 q1 NAV $3.09
2021 q1 NAV $3.14
2022 q1 NAV $3.91
These days, I ONLY keep an eye out for dividend paying stocks - due to my strategy change, so I don't know for certain that YGR is the best O&G deal in comparison to its book value - but I think it's VERY likely that it is.
Binkie wrote: Interesting stuff Hungus, the outcomes you get with the lense you are using are practical and useful. I'm not looking at dividend yield as the primary driver otherwise I would not hold VET as it's current yield is a token, but a starting point. They used to pay strong dividends and maintained it via debt when they shouldn't have which got them into trouble. The industry was in trouble not too long ago but is enjoying a renaissance so I find it difficult to hold past mistakes against them.
Over the past 18 months there are a lot of oil companies that have doubled, tripled and much more like YGR . I really only came back into the sector at the start of this year and missed the generational opportunities as many call it. Which ones are the best candidates to double in the next 12 months? I generally use multiples of FFO/share as a predictor but dig deeper into things like debt, assets, RLI etc to firm up decisions.
My projections for YGR using a modest 3.5 times FFO per share at $95 and $4.30 AECO was $5.75 and it was trading at $2.50. Free cash flow per share would be about $0.75-80
Eventually a good portion of that will start coming back to shareholders. We are at $3.44 today so up almost 40% since I bought and I'm thrilled - where do you get yields like that??
But I'm still bargain hunting and open to ideas to research. Thanks to all for your input in this discussion!