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Dividend Investing
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Cardinal Energy, divinded of 9% & its prospectsCardinal Energy (CJ.TO) offers currently a stable high 9% dividend. Let's see below if Cardinal can offer the same dividend in 2018: We will examine company's free cash flow, if oil and the exchange rate remains where it is now. Their base case is $69.5 million free cash flow with wti at $55, before the dividend. For every $1 above $55 wti, they estimate an extra $4 million free cash flow For every $0.01 cad above the $0.78 CAD/US exchange rate, they lose $2.7 million. So with WTI at $64, they get an extra 37.6 million. So here is the free cash flow AFTER THE DIVIDEND: $69.5 million base case with wti at $55, +37.6 million since WTI is higher, -$5 million due to the cad dollar strength, - about $47 million on the dividend they pay out = $54.7 million free cash flow AFTER the dividend. Therefore in my opinion the divinded is safe, at least for 2018. |
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