Freehold Royalties Ltd (FRU.TO)

(A Top Pick December 1/17. Down -14%.) He considered this a low-volatility oil company because it is a royalty company. He is sticking with it as a lower-beta oil play even though it has sold off more than he expected.

Good solid yield. Well managed company. Had owned it in the past. Regret selling it. Not in drilling and the actual production. They just buy into existing productions and pay reasonable amounts.

(A Top Pick May 15/17. Up 7%.) This probably still has more potential. Royalty companies are the definition of low cost providers. This has about a 4% dividend yield, which should go up a little every year. Trades at probably half the valuation of its comparable PrairieSky (PSK-T). Very attractive and has lots of upside.

One reason he likes this is that oil is over $60. It is very investable again. Money comes into the energy sector finally, in 2018. One of the few Canadian energy companies that raised its dividend, and he expects a similar one in March. A safe way to play energy because 95% of their business is royalties. They don't actually produce oil. A very stable earnings base. The stock is undervalued and under owned, so thinks it is a $16-$18 stock. Dividend yield of 4.3%. (Analysts' price target is $18.)

This is a good way of smoothing your returns and still get some exposure to energy. If you want to take an entry position into the energy sector with less aggression, this is a good way to get into the energy sector. (Analysts’ target: $17.75)

This operates in the capital-intensive business of oil and gas but, because they are a royalty company, their capital intensive is extremely low. They have the lowest operating cost in the industry. Has a 6% free cash flow yield. Dividend yield of 3.9%, which he expects to be increased again next year. (Analysts’ price target is $17.75.)

They pay for the royalty on the land for which they did a deal with the producer. He sold a couple of years ago when he sold most of his energy. It does not have the torque of a producer. It is a good way to play if you are not sure where the price is going. You could hold it for the dividend.

(A Top Pick Feb 8/17. Up 27%.) A safer way of playing energy. Has been collecting a 4% yield. Volumes are picking up. The lands they are collecting royalties on, and with $50 oil, they’re starting to drill more, so royalty cheques are getting bigger. It was a safer way to play the rebound in energy. Still thinks it is undervalued and is a good holding.

(A Top Pick Dec 5/16. Up 11%.) An owner of royalty interests, primarily in Western Canada, the #2 player after PrairieSky (PSK-T). Thinks it is cheaper than PrairieSky and pays a better dividend. Expects it to go higher in the next year.

(A Top Pick Aug 2/16. Up 38%.) Thinks 90% of their revenues now are from royalties. They’ve done a good job of getting capital deployed on their land so that the cash flow can grow. Had a dividend increase, and could potentially have another before year-end. Dividend yield of over 4%.

WCP vs. FRU-T. He prefers Freehold. It is a safer way to play energy in these times. They put a great quarter out last night, raised their dividend. If oil went to $55-$60 you would make more money in WCP-T. FRU-T has a low payout ratio.

Very similar characteristics to PrairieSky (PSK-T). Historically people preferred PrairieSky because it was bigger and was absolutely a 100% pure royalty story. This one has had some working interest properties, and they are now getting rid of those, and is already 90% royalties, and will soon be 100%. Dividend yield of 4.2%. (Analysts’ price target is $16.50.)

(A Top Pick July 25/16. Up 16.39%.) He was happy to see them increase their dividend this year. It still trades at a big discount to PrairieSky (PSK-T) even though their operating metrics are in line. A good, low risk way to play an oil/gas recovery, and get paid while you wait.

A royalty company which goes up and down with oil prices. They increased their dividend this year. The 4.4% dividend yield is attractive.

Energy prices are slowly gravitating upwards, but we are still probably a year or 2 sideways in oil prices. The key to successful investing is keeping costs low, and you can’t get lower costs than what the royalty companies have. This company has a great portfolio of royalty properties. Dividend yield of 4.3%. (Analysts’ price target is $16.75)