CA - Cardinal Energy: Current Oil Price Should Not Jeopardize The 11% Dividend

2024-06-24 10:30:00 ET

Summary

• Cardinal Energy pays an attractive monthly dividend of C$0.06 per share, yielding over 11%.
• Company's production increase of 6,000 barrels of oil per day may lead to increased net debt in the next few years before the new project starts contributing.
• Cardinal Energy's growth prospects, reduced net debt, and potential strong Q2 cash flow make it an appealing investment for dividend income and growth.

Introduction

I like Cardinal Energy ( CJ:CA ) ( CRLFF ) for two reasons: it is paying a very attractive dividend with a monthly payment of C$0.06 per share, resulting in a dividend yield of in excess of 11% at the current share price. However, the company is also executing on a growth plan which will result in a production increase of 6,000 barrels of oil per day, but it also means the current operating cash flow cannot cover both the dividend as well as the growth capex. This means the net debt level will likely increase in the next few years until the new SAGD heavy oil project will start contributing to the bottom line....

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