Robert LauzonTopaz EnergyTPZ.TOPAST TOP PICKApr 10, 2023

Calgary-based energy infrastructure. Royalty assets plus gas infrastructure. Great management team, great assets, good capital allocation. Smaller, so it flies under the radar. Infrastructure spending in Canada is a tailwind for its business. Good long-term name. Yield is 4.35%.

A relatively new holding for his firm. You get a royalty stream plus infrastructure, so lower risk than E&P. It's also growing. Between dividends and growth and excess FCF, total shareholder return is ~13-14% this year. That's pretty healthy. Yield is 5%.

Very tied to TOU, in terms of royalties and infrastructure. TOU is reducing its stake over time, which should help trading liquidity. Well run. Likes gas processing and royalty assets. He owns similar companies in the space, but those don't have concentrated exposure to one company. Add on weakness, don't trim here.

Probably the favourite among all his energy children. Unique, hybrid model of royalty (~75% of revenue) and infrastructure. Around 70% exposure to gas. His view is that gas will strengthen in 2026 and for a couple of years after that. Nice income stream from organic operations and M&A. Very clean balance sheet. One of the best operators in Canadian oil patch.

Aim is to have more of dividend supported by the infrastructure side, as it's even steadier than royalties. At midpoint of payout ratio of 60-80% of FCF. Growth, lower volatility. Nice yield of ~5%.

Top of the heap for what he'd want to own in terms of O&G royalty companies and infrastructure.

Hasn't looked at it in a long time.

We like TPZ for an income play as it pays a good dividend yield of 5.4%, generates good free cash flow, and does not have too much debt. Its balance sheet is strong, forward sales and earnings estimates point towards high growth rates, and overall we would be comfortable with this name for a long-term dividend name, although, it has seen a nice run recently, and we would expect a period of consolidation.
Unlock Premium - Try 5i Free

It is part infrastructure and part royalty which is a good combination. It is well run and you could continue to hold. He owns this space in other ways.

Half of its portfolio is royalties from infrastructure and the other half is royalties from the best companies and best plays in Canada. It owns the land associated with these royalties. It has high free cash flow and pays a high dividend of 6% giving it stability. It should trade around $30. The energy sector is finally lifting but needs more stability in oil prices. He feels the price can stay in the $75 to $80 range for the longer term.
Buy 13  Hold 0  Sell 0

TPZ is forecasted to double it's EPS in 2024 while seeing revenue growth of 4%. TPZ's recent quarterly earnings displayed solid growth while the company continues to be heavily tied to commodity pricing. We think TPZ is fine to hold for income as it pays a good dividend yield at 6.6%, but the payout ratio is quite high compared with the sector.  The outlook and strong recent quarter display positively for short-term growth, but we think that there are better options for long-term potential. TPZ is also trading at a very expensive valuation versus other peer companies. 
Unlock Premium - Try 5i Free

Excellent company with high quality management.
Current share price a good place to buy.
Continues to rise revenues.
Royalties on excellent acreage.
Expects dividend to grow.

Performed quite well, good yield, management seems quite strong. A promising and strong space. Good one to consider if you want income from the oil/gas space.

Likes prospects of company. Spinout from Tourmaline Oil & Gas. Very attractive valuation given current share price. Not much debt on the balance sheet. Lots of room to grow. 6% dividend yield and good management team.