CA - Paramount Resources: Dividend Up 20% With A Debt Free Balance Sheet

2024-05-02 19:47:00 ET

Summary

• Paramount Resources is a Canadian company that plans to pay a monthly dividend of C$.15 per share.
• The company has a debt-free balance sheet and room to grow its dividend.
• Despite a decline in production due to a rough Canadian winter, management remains committed to long-term growth plans.
• The emphasis on condensate production leads to above-average profitability.
• The wells are rather large producers compared to elsewhere in the Canadian industry.  That large amount of production makes these wells very profitable also.

Paramount Resources ( OTCPK:PRMRF ) is a Canadian company that reports in Canadian dollars unless otherwise noted. Management announced that the next monthly dividend will be C$.15 a share. The company has a lot more room to grow that dividend along with a debt free balance sheet. Furthermore, this is one of the few companies I follow that is growing production and the dividend at the same time. Now the first quarter Canadian winter put a quarterly crimp in those growth plans. But management is adjusting guidance to take into account the actual results of the first quarter. Management has not given up on the long-term growth plans. This is that rare slow growth and income play that should treat income investors very well over time.

The previous article noted that the dividend was well supported. Since this has long been a growth story, the large dividend increase was a surprise. It may be an attempt to meet the market demands for more investor returns that would hopefully erase the perceived stock price discount. But it also sends a strong message to the market that this will be a growth and income play rather than a growth play with a dividend....

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