Whitecap Resources (WCP.TO)

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.

A good oil company. They’ve held up better than others. He would prefer Torque (?) or Spartan (SPE-T) based on valuations. The company just gave an update and are temporarily down in the low $40s, so he wouldn’t be looking for a dividend cut. At $50 oil, total return is probably 13 or 14. His preference would still be to go into some of the Permian guys.

This is one he has been looking at and one he would like to own. It has the 2^nd lowest breakeven point for oil in Canada. At current prices, its payout ratio is around 80%, which is pretty good. A very, very well-managed company. Dividend yield of 2.9%. This is one you can seriously look at.

(A Top Pick Feb 10/17. Down 10.99%.) Loves the management team. Saskatchewan/Alberta with light oil. This is a dividend paying model where they can grow production 7%-10% a year. Pays about a 3% dividend, but all from the confines of cash flow. They are not taking on more debt to build the company. As the price of oil goes up, they’ll either do more acquisitions or they’ll raise the dividend again. Dividend yield of around 3%.

Great assets and great management. A core holding in a dividend paying portfolio. A low-cost producer of light oil in Saskatchewan and Alberta. They aim to grow production 7%-10% per year. 2.9% dividend yield.

A very well-run company. His quarrel is that they have been paying out a dividend, and have to issue equity, diluting existing shareholders to grow the business. Hopefully, as energy prices gradually improve, which he believes they will, this will provide you with good returns. Right now, people are worried that they might buy Raging River (RRX-T). There are probably easier trades. (See Top Picks.)

It is a reasonable valuation and has reasonable book value. The problem is price momentum. The trend is lower.

An excellent quality company. They can keep increasing dividends as oil prices stabilize. They have a lot of free cash flow. We have seen some pretty significant increases in production, all internally funded. It has done nothing so it has lots of upside.

There is nothing wrong with it, but there is a buyer strike. Investors are standing back. He has US names that will grow more and at a cheaper valuation. It is difficult to make a case for owning the Canadian names.

When a sector gets crushed the overwhelming sentiment is to go back and look for the money that you feel it owes you. A lot of people jumped right back into the energy stocks in Jan-Feb. The history is, unless you get significant restructuring, it is likely there is going to be some indigestion after 12-14 months. That looks like what we are getting. He would prefer something like Algonquin Power (AQN-T) which is acting pretty well and is in a defensive group.

This has recently caught his attention. 2-3 years ago, this was considered to be one of the dividend stocks to hold. Because of the price of energy, it has come down since the beginning of the year. Very well-managed. This is showing up on his valuation screens as looking reasonable.

Among the oil/gas dividend players, he considers this to be the best in the group. He doesn’t buy oil/gas dividend stocks, because they are too volatile for the yield. This company will continue to grow its production by 5%-10%.

(A Top Pick Sept 12/16. Up 1.92%.) A very good company. What has been hurting Canadian producers is the reaction to what is going on in the US with the border adjustment tax Trump has been talking about.

Great management. It has very light oil properties in Alberta and Saskatchewan. The team has focused on properties that have a low decline rate of about 20%, and don’t have to drill is much as companies that have a 40% decline rate. Bought a large Saskatchewan land play off of Husky Oil last year. Dividend yield of 2.61%. (Analysts’ price target is $14.92.)

Whitecap Resources (WCP-T) or Crescent Point (CPG-T)? Two different types of companies. This is more of a growth company paying a dividend, while Crescent Point is much more mature. It pays a fairly good dividend. This caught his attention lately and he has begun to look at. Very good balance sheet. They have capacity to bring on another $1.3 billion in debt. People are forecasting this is going to grow from 46,000 barrels a day, to something like 57,000. If you want more potential growth, this is probably not a bad way to go. Pays a very generous dividend.