Re: Buy back or dividends
CVE is in perfect shape to do this. Once debt is $10B tgey should buyback until the FCF yield falls due a rising share price in which case the effectiveness is reduced. Then slowly reduce debt and pay us big dividends.
The formula is actually quite simple, and I’m not sure why so many companies get it wrong. Assuming debt is under control this should be the formula:
Shares are underpriced = focus on buybacks
Shares are fairly priced = focus on dividends. Base + specials are appropriate for cyclical businesses
Shares are very fully priced or overpriced relative to the industry = use shares as currency for accretive acquisitions
Rinse and repeat.