monthly dividend

PEYTO EXPLORATION & DEVELOPMENT CORP. $28.80 (Toronto symbol PEY; Shares outstanding: 148.5 million; Market cap: $4.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 2.5%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 49,754 barrels of oil equivalent is 89% gas and 11% oil.

In the three months ended December 31, 2012, the company’s cash flow was $0.62 a share, up 3.3% from $0.60 a year earlier. A 26.3% rise in production offset lower gas prices.

The shares trade at 9.8 times Peyto’s forecast 2013 cash flow of $2.95 a share. The company’s long-term debt of $580 million is a low 13.5% of its $3.4-billion market cap.
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CARFINCO FINANCIAL GROUP $8.42 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 26.4 million; Market cap: $226.9 million; Dividend yield: 5.7%) provides car loans to consumers who don’t meet the criteria of traditional lenders, like banks.

In the three months ended March 31, 2013, Carfinco’s revenue rose 14.4%, to $19.2 million from $16.8 million a year ago....

Please note: The next Stock Pickers Digest newsletter issue will be sent out on Friday, May 24, 2013. WESTJET AIRLINES LTD., $21.85, symbol WJA on Toronto, fell almost 13% this week, even though it reported record earnings in the latest quarter. WestJet reports that its earnings jumped 33.3% in the three months ended March 31, 2013, to $91.1 million from $68.3 million a year earlier. That marks the company’s 32nd consecutive quarter of profitability. Earnings per share rose 38.8%, to $0.68 from $0.49, on fewer shares outstanding. Revenue rose 8.6%, to $967.2 million from $891.0 million a year earlier....

Pat McKeough responds to many requests for specific advice on stock market investing and other questions on investment and the economy from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week, an Inner Circle member asked about the prospects for one of Canada’s leading natural gas processors and distributors. AltaGas profits from a number of fixed long-term contracts, but it is also growing by acquisition and diversifying into new sources of energy. Pat looks at the company’s ability to manage this added risk going forward....

AltaGas Ltd., $37.78, symbol ALA on Toronto (Shares outstanding: 117.7 million; Market cap: $4.8 billion; www.altagas.ca), mainly extracts, processes and distributes natural gas. It also processes natural gas liquids and generates power in Alberta. Excluding one-time items, AltaGas earned $55.5 million in the three months ended March 31, 2013. That’s up 38.4% from $40.1 million a year earlier. Earnings per share rose 17.8%, to $0.53 from $0.45, on more shares outstanding. Cash flow per share gained 42.0%, to $1.15 from $0.81. Revenue increased 72.1%, to $620.5 million from $360.5 million. The improved results mostly came from Semco Holding Corporation, which operates natural gas utilities in Alaska and Michigan. In August 2012, AltaGas bought Semco for $1.14 billion, which is its biggest acquisition to date....

CARFINCO FINANCIAL GROUP $8.42 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 26.4 million; Market cap: $226.9 million; Dividend yield: 5.7%) provides car loans to consumers who don’t meet the criteria of traditional lenders, like banks.

In the three months ended March 31, 2013, Carfinco’s revenue rose 14.4%, to $19.2 million from $16.8 million a year ago. It loaned $36.6 million in the quarter, up 12.9% from $32.4 million. Earnings per share rose 5.3%, to $0.20 from $0.19.

The company raised its monthly dividend by 14.3%, to $0.04 from $0.035, starting with the October 2012 payment. That was Carfinco’s fourth dividend increase since the start of 2011. The higher payout gives the stock a 5.7% yield.
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The price of natural gas has more than doubled in the past year, but prices of natural gas stocks have not kept pace. Maybe that’s because investors take it for granted that winters will remain warm due to global warming. But if that’s how things turn out, rising temperatures will increase demand for air conditioning, which of course runs on electricity.

As well, natural gas may be dirtier than wind and solar, but it offsets coal use, mainly in electricity generation....

Renegade Petroleum, $1.16, symbol RPL on Toronto (Shares outstanding: 203.1 million; Market cap: $239.7 million; www.renegadepetroleum.com), produces and explores for oil in Saskatchewan. Renegade began paying a monthly dividend of $0.19167 a share in January 2013. It now has a very high 19.8% yield. The company’s plan is to pay an annual dividend of $0.23 a share while generating 2% growth in cash flow per year. Renegade also aims to protect that dividend by gradually hedging 75% of its 2013 production and 60% of its 2014 output. The company has identified more than 1,000 drilling locations in Saskatchewan. It also has $695 million in tax pools that will let it avoid paying income tax well into next year....

PENGROWTH ENERGY $4.98 (Toronto symbol PGF; Shares outstanding: 512.6 million; Market cap: $2.6 billion; TSINetwork Rating: Average; Dividend yield: 9.6%; www.pengrowth.com) produced 85,748 barrels of oil equivalent a day (60% natural gas and 40% oil) in 2012. That’s up 15.9% from 73,973 barrels in 2011.

The stock is down 47% in the past year. That’s because investors are concerned that low gas prices and Pengrowth’s high debt ($1.8 billion, or 69% of its market cap) will force it to cut its $0.04-a-share monthly dividend, for a 9.6% annualized yield.

However, Pengrowth’s rising oil production will cut its risk. This includes its Lindbergh oil sands project, which is now under construction. Moreover, the company has $4.5 billion of tax pools that it can use to cut its tax bill until 2017.
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CARFINCO FINANCIAL GROUP $9.32 (Toronto symbol CFN; TSINetwork Rating: Speculative) (1-888-486-4356; www.carfinco.com; Shares outstanding: 24.6 million; Market cap: $229.3 million; Dividend yield: 5.2%) provides car loans to consumers who don’t meet the criteria of traditional lenders, like banks.

In the three months ended December 31, 2012, Carfinco’s revenue rose 16.1%, to $19.2 million from $16.5 million a year earlier....