Tag Archives: TSX:VET

Which Stock is More Likely to Cut its Dividend?

Vermilion Energy (TSX:VET)(NYSE:VET) and TORC Oil & Gas (TSX:TOG) are trading at multi-year lows and offer yields of 10% and 7.6%, respectively. Which is more likely to cut its dividend?

There are some things that management can’t control, such as commodity prices, and there are some things that they can control, such as capital allocation (i.e., how much cash flow to allocate for reducing debt, sustaining the business, investing in growth projects, and paying dividends).

Looking at how the companies have handled their capital allocation in the past can give an idea of which oil & gas producer will more likely cut its dividend.


Vermilion’s stock has maintained or increased its cash distribution or dividend every year since 2003. Since 2003, VET’s total payout ratio (which accounts for sustaining capital, growth capital, and dividend) has expanded to as high as 162%, but the company didn’t once cut the dividend.

VET places a high priority on its dividend. If history is indicative of the future, then VET will try to maintain the dividend even when the operating environment is tough.

Notably, VET doesn’t have the tendency to buy back stock like other energy companies, such as Suncor Energy (TSX:SU)(NYSE:SU) and Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ). Last year, the capital the company returned to shareholders was 100% dividends.

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Vermilion Energy Inc, A Mid-Cap Energy Stock Yielding 6%

Investors maybe staying away from energy stocks right now, especially the smaller ones. Who can blame them? Many have cut their dividends, including these mid-cap energy stocks: Bonavista Energy Corp (TSX:BNP), Enerplus Corp (TSX:ERF)(NYSE:ERF), and Baytex Energy Corp (TSX:BTE)(NYSE:BTE). In fact, Baytex announced in August that it was eliminating its dividend for the time being. Well, among these companies, there’s one that’s still maintaining its dividend thus far.

Vermilion Energy Inc (TSX:VET)(NYSE:VET) has never cut a dividend since 2003. If you’re looking for an opportunity for an oil price comeback, Vermilion Energy maybe a safer energy stock compared to its peers above.

Vermilion Energy remains a stable investment in the mid-core energy realm with its global asset diversification. Vermilion Energy’s global asset portfolio, in Europe, North America, and Australia, provides commodity diversification and premium pricing compared to asset portfolios solely located in North America. For example, Vermilion’s European Gas portfolio is projected to contribute 26% of its FFO, and European gas prices are 3 times higher than in North America.

Vermilion Energy’s Dividend Sustainability

At $43 per share, Vermilion Energy yields 6%. Can the international oil and gas producer sustain its dividend? Its trailing twelve months (TTM) operating cash flow was $621M. In the last 12 months, it paid out $281.2M of dividends. So, that equates to a payout ratio of 45.3%. Using the stricter metric of free cash flow (FCF), Vermilion’s payout ratio would be 50.8%. Read More

Canadian Monthly Dividend Stocks for April 2015

Dividend stocks are attractive because they pay an income no matter what the market is doing. It’s true that some dividend stocks cut their dividends in harsh times. So, having a diversified portfolio of high quality dividend stocks will mitigate the risk of dividend cuts, and dividends received from the portfolio as a whole could even increase every year.

The index fund, iShares S&P/TSX 60 Index Fund (TSE:XIU) pays out a yield of 2.6%. Here are some monthly dividend stocks that you can consider. They pay 73% to 150% more than the index fund, respectively.

Vermilion Energy is the Best Amongst its Peers


When thinking of Energy companies, companies like Suncor Energy, Enbridge, TransCanada, and Canadian Natural Resources come to mind. However, smaller mid cap companies can provide higher growth potential than large cap companies, and at the same time, are more established and stable than small cap companies.

Vermilion Energy Inc. (TSX:VET)(NYSE:VET) is a mid core energy company that is the best of its kind. Essentially, it is a blended play of value and growth. Vermilion Energy is diversified globally with leading positions in high netback businesses in North America, Europe, and Australia.

Vermilion Energy started investing in the Corrib natural gas project in Ireland since 2009. Finally, the capital expenditure spent will start paying off, as the project comes online in mid 2015. It will add to the company’s overall production growth as well as its cash flow.

Since 2003, Vermilion Energy has paid a reliable dividend, not having to cut it once. It yields 4.5%, and pays out a monthly dividend of $0.215 per share.

Further, Vermilion Energy has a record of creating shareholder value.

Value creation record of Vermilion Energy

Source: Vermilion Energy Investor Presentation – April 2015

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