Suncor Energy Inc T.SU

"Irrational Exuberance" is fun but unrealistic

[Obscure1]

A couple of factors to consider:

1) The higher dividend is likely sustainable which makes sense as WTI at $55 or higher seems like a given.  Even if the price of WTI dips below $55 at some point, it will likely be temporary unless the politicians suddenly decide that global warming is a hoax or that heat in the winter is more important than worrying about a 9" rise is sea level by the end of the century or the increase in forest fires which could be allieviated with proper forest management.

2)  The yield for SU is likely never going back to below 1% like it was before 2010, and maybe not back to 3% where it was until 2018 because of ESG, but if the dividend is in fact sustainable, and SU continues to present itself as an ESG friendly company, we are likely to see the yield drop back to 4%.  SU's closest competitor is CNQ which is yielding 3.65% and while CNQ has the advantage of being more heavily concentrated in nat gas, SU has the advantage of being fully integrated which means it has a built in market for a good chunk of its upstream production which makes SU a much less risky investment.  A yield of 4% means would anticipate a target price of $42 based upon 25x the dividend = 25 x $1.68 = $42.00 per share

Before getting all giddy about a $42 share price target, the fact remains that ESG based institutional funds likely still have hundreds of millions of shares of SU to sell.  At the same time, the appetite for dirty oil will likely remain limited. 

Until SU and the rest of the tar sands industry figures out how to reduce GHG levels to match other oil sources in the short term and find the path to a long term sustainable business model based upon renewables or something else, I think SU will have to grind away and prove to the market that it is on the right track.

I don't like seeing posters being disrespectful to other posters who offer value expertise and educated opinions to this site.  Lively debate of differing opinions is wonderful, but none of us has a crystal ball. 

Heck, yesterday I bet on SHOP hoping for an earnings BEAT and I was wrong.  The silly part is that I sold today for $130 per share win despite being wrong which only goes to show that it is better to be lucky than good.

[PabloLafortune]

The fully restored dividend takes precedence over buybacks and debt reduction which is very important. Whereas before, half the divi had priority, the other half was after...maybe.... Big policy change and big difference for dividend shareholders which will definitely support the stock at a higher level.