Monthly Dividend Stock In Focus: Surge Energy

Revealed on Might 14th, 2026 by Nathan Parsh

Surge Vitality (ZPTAF) has two interesting funding traits:

#1: It’s providing an above-average dividend yield of 5.3%, which is almost 5 instances the typical dividend yield of the S&P 500.

#2: It pays dividends month-to-month as an alternative of quarterly.

Associated: Record of month-to-month dividend shares

You may obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter like dividend yields and payout ratios) by clicking on the hyperlink beneath:

The mixture of an above-average dividend yield and a month-to-month dividend makes Surge Vitality a gorgeous choice for particular person buyers.

However there’s extra to the corporate than simply these elements. Preserve studying this text to be taught extra about Surge Vitality.

Enterprise Overview

Surge Vitality is an unbiased oil and gasoline exploration, growth and manufacturing firm that operates primarily in Alberta, Saskatchewan and Manitoba.

The corporate holds a targeted and operated portfolio of sunshine and medium gravity crude oil belongings, together with massive oil‑in‑place reservoirs with low restoration elements.

Surge Vitality maintains a big stock of low-risk growth drilling places, together with advancing water‑flood enhanced restoration initiatives, whereas retaining operator management and excessive working pursuits throughout its key performs. Its technique revolves round disciplined capital allocation, together with concentrating on the best return alternatives.

Surge Vitality is headquartered in Calgary, Canada. It was based in 1998 beneath the title Zapata Vitality and altered its title to Surge Vitality in 2010. The corporate must be considered as an nearly pure oil producer.

Surge Vitality presents buyers publicity to 2 of the highest 5 typical oil progress performs in Canada, specifically the Sparky and Saskatchewan. Every of those two performs presents distinctive financial traits.

Supply: Investor Presentation

Due to the exceptionally excessive working netbacks of its crude oil reserves and low decline charges, Surge Vitality enjoys one of many widest free money move margins (23.9% for 2025) in its peer group.

As an oil producer, Surge Vitality is delicate to the cycles of the oil business. This sensitivity is clearly mirrored within the unstable efficiency report of the corporate. On the intense aspect, Surge Vitality has remained worthwhile each single 12 months during the last decade.

Even in 2020, when most oil producers incurred losses as a result of coronavirus disaster, Surge Vitality remained worthwhile. This can be a testomony to the top quality and low manufacturing price of the reserves of the corporate.

Surge Vitality reported first quarter outcomes on March thirty first, 2026. Whole petroleum and pure gasoline income was ~$113 million. The corporate generated $50.7 million in adjusted funds move, or $0.51 per share fundamental, which was down from adjusted funds move of $57.3 million, or $0.57 per share, in Q1 2025.

The year-over-year lower was pushed primarily by decrease realized commodity costs and a realized loss on commodity and FX contracts, partially offset by modestly greater manufacturing and decrease royalties per boe.

The corporate had common every day manufacturing of 23,893 boe/d for the interval, with crude oil and NGLs representing about 89% of the manufacturing combine. Free money move totaled $18.8 million.

We count on that Surge Vitality will generate adjusted funds move of $2.00 per share in 2026, which might be a 1% decline from the beforehand 12 months.

As Surge Vitality is very delicate to the gyrations of the worth of oil, it is very important look at the standing of the worldwide oil market. OPEC supplied sturdy help to the worth of oil by way of unprecedented manufacturing cuts in the previous couple of years however this technique reached its limits in 2024 as a result of increase of manufacturing in nations outdoors the cartel.

The U.S., Canada and Brazil, have been benefiting from the lowered output of OPEC and thus they’ve been rising their output at a quick tempo. Because of this, they’ve been gaining market share from OPEC whereas mitigating the impact of the sacrifices of OPEC members.

This example led many OPEC members, which depend on oil gross sales to fund their authorities budgets, to develop into dissatisfied with their lowered manufacturing quotas. Notably, Angola exited OPEC initially of 2024 because of its dissatisfaction with its low manufacturing quota.

Extra just lately, the United Arab Emirates left OPEC on Might 1st, 2026 as that nation seemed to pursue greater manufacturing objectives.

Progress Prospects

Surge Vitality has thrilling progress potential, primarily due to its dominant land place within the Sparky space, which incorporates one of many largest accumulations of oil in Canada.

Supply: Investor Presentation

Due to its deal with this extremely prolific space, Surge Vitality has grown its manufacturing within the Sparky space at a formidable fee, from 1,800 barrels per day in 2011 to almost 24,000 barrels per day in 2025.

As there are completely no indicators of fatigue, we count on sturdy manufacturing progress to stay in place for the following a number of years.

Then again, as an oil and gasoline producer, Surge Vitality is weak to the wild swings of the worth of oil. The corporate posted report funds move per share in 2022 due to the onset of the warfare in Ukraine and the resultant sanctions of the U.S. and European Union on Russia, which led the worth of oil to skyrocket to a 13-year excessive.

The worldwide oil market ultimately absorbed the influence of the warfare in Ukraine and OPEC started to unwind its manufacturing cuts, which precipitated the worth of oil to reasonable.

Because of this, the funds move per share of Surge Vitality decreased from an all-time excessive of $2.96 in 2022 to $1.99 in 2024. Outcomes stabilized in 2025, with funds move per share of $2.02 final 12 months.

Nevertheless, power costs have elevated dramatically because the begin of the battle within the Center East between the U.S. and Iran. The closing of the Strait of Hormuz is more likely to profit the corporate, not less than within the close to time period, as power costs will seemingly stay excessive in the course of the battle.

Regardless of the promising progress prospects of Surge Vitality, we now have assumed flat funds move per share over the following 5 years to be able to be on the secure aspect, given the wild swings of the worth of oil and the considerably excessive comparability base shaped by the anticipated funds move per share this 12 months.

Surge Vitality has a considerably leveraged however first rate steadiness sheet. Its web debt is CAD$22.6 million, which is a couple of third of the market capitalization of the inventory. Below regular enterprise situations, the corporate shouldn’t be more likely to have any drawback servicing its debt.

Then again, within the occasion of a extreme and extended downturn, Surge Vitality could come beneath some stress because of its considerably leveraged steadiness sheet.

Nonetheless, the defensive enterprise mannequin of Surge Vitality, which has helped the corporate stay worthwhile even in the course of the fiercest downturns of the power sector, renders this upstream participant pretty resilient to downturns.

Dividend & Valuation Evaluation

Surge Vitality is at present providing an above-average dividend yield of 5.3%, which compares favorably to the 1.1% yield of the S&P 500.

The inventory is an attention-grabbing candidate for revenue buyers, however they need to bear in mind that the dividend shouldn’t be completely secure as a result of dramatic cycles of the worth of oil.

With that mentioned, Surge Vitality has a wholesome projected payout ratio of solely 19% for 2026. Given additionally its high-quality belongings and its resultant promising progress prospects, the corporate is more likely to elevate its dividend within the upcoming years, simply because it has for the previous three years.

In reference to the valuation, Surge Vitality is at present buying and selling for 3.6 instances its anticipated funds move per share this 12 months. Given the excessive cyclicality of the corporate, we assume a good price-to-funds move ratio of two.5.

Due to this fact, the present funds move a number of is greater than our assumed truthful price-to-funds move ratio. Reverting to our goal valuation would cut back annual returns by 7.0% over this time period.

Taking into consideration flat funds move per share over the following 5 years, the 5.3% present dividend yield, and a excessive single-digit headwind from a number of compression, Surge Vitality may provide a -0.3% common annual complete return over the following 5 years.

Whereas the excessive dividend yield with a large margin of security is enticing, the anticipated complete return indicators that buyers ought to await a decrease entry level.

Last Ideas

Surge Vitality has been thriving since 2021 due to a perfect atmosphere of above-average oil costs. The inventory is providing an above-average dividend yield of greater than 5% however its considerably wealthy valuation indicators that buyers ought to most likely await a extra opportune entry level.

It’s also essential to notice that Surge Vitality has confirmed extremely weak to the cycles of the worth of oil. Due to this fact, it’s appropriate just for affected person buyers, who can endure excessive inventory worth volatility.