Alex Ruus Freehold Royalties Ltd FRU-T PAST TOP PICK Nov 15, 2024

Lower risk that E&P. It's chosen to be more active in the US, and activity levels have been a bit higher there. Q1 showed activity up 30% in US, down 30% in Canada. Now almost 70% of activity is in US. 

Sometimes a Canadian company gets its head handed to them, because it just isn't part of the culture. Smaller than peers, so trades at a discount. He'd prefer TPZ. Yield of just under 10%.

He focuses on the top third of relative price performers in a group. The best companies tend to keep getting better. Decent assets, but relative price performance versus the market has been weakening since 2022. Lots of other opportunities for yield and dividend growth in the energy space. He'd prefer ARX or TOU.

It acquires and manages oil and gas royalties which is less risky than the actual production. Has a dividend of 5 1/2% with a forward dividend over 8%. There is no risk re a dividend cut. Scores 8 out of 10 fundamentally and 10 out of 10 on valuation.

Still in a downward trend, but getting very close to the top of that downward trend. Breaking out right now, and if that continues it looks like a good buy. Lots of support around $12.60; if it can hold above that, worth holding on to. Will probably run its course around $14, where there's very strong resistance. Yield is 8%.

It is in bottom half of the data base but the payout is probably sustainable. ROC is negative.

PE ~13.3x. Great value. Strong income play, no signs of a dividend cut. Trading mid-range of its 52-week band. Analysts rate it a hold. Emphasizing US growth and strategic consolidation. Q4 production rose 10% YOY, dividend hiked. Still likes it. Yield is 8.2%. 

Freehold Royalties reported strong second quarter (Q2) 2025 earnings, highlighted by solid production growth but with a year-over-year decline in profitability on lower commodity prices. Revenue was $78 million, reflecting continued operational momentum and a 9% year-over-year increase in total production. Total production grew by 9% compared to Q2 2024, indicating strengthened asset performance and successful leasing activity. Net income for the quarter was $6.24 million, which is a significant decrease versus $39.3 million in Q2 2024. Still, we like the production growth and valuation, and would see it as a BUY for the sector. 
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More defensive than other names in the space, as you're not taking on the capital-investment risk to develop resources.

Owns the land that others drill and pay FRU a portion of what they extract. Loves it. One of the best management teams in the royalty space. Very good balance sheet. Very good geographic locations, both in Canada and (more recently) in US. Very conservative capital allocators. Very good dividend yield ~8%.

If you believe (as he does) that oil and gas prices will go up over next little while, then this name should perform from a bump up in drilling activity.

Likes the dividend of just below 8%. With that kind of yield, can't expect stock price to do that much. Up 6% this year, not as much as the market. Considering price of oil and that yield, she's OK with it. Breakeven oil price is ~$50, and they're transparent about this. Has cut dividend in past, but first to raise again when oil price recovers.

Likes management. Royalty, so not spending $$ on drilling and exploration. Will probably see more acquisitions in US.