Monthly Dividend Stock In Focus: Whitecap Resources – Sure Dividend

Up to date on April thirtieth, 2025 by Felix Martinez

Whitecap Assets (SPGYF) has two interesting funding traits:

#1: It’s providing an above-average dividend yield of ~9%, which is sort of six occasions the yield of the S&P 500.
#2: It pays dividends month-to-month as a substitute of quarterly.
Associated: Checklist of month-to-month dividend shares

You possibly can obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter, like dividend yield and payout ratio) by clicking on the hyperlink beneath:

The mix of an above-average dividend yield and a month-to-month dividend makes Whitecap Assets an interesting choice for particular person buyers.

However there’s extra to the corporate than simply these components. Maintain studying this text to study extra about Whitecap Assets.

Enterprise Overview

Whitecap Assets is an oil and fuel firm targeted on buying, growing, and producing oil and fuel in Western Canada. The corporate’s growth packages deal with Northern Alberta and British Columbia, Central Alberta, and Saskatchewan. Whitecap Assets is headquartered in Calgary, Canada.

Whitecap Assets has some engaging traits. Initially, its belongings are characterised by low decline charges. That is paramount within the oil and fuel business, as many producers undergo from excessive pure decline charges.

Supply: Investor Presentation

As Whitecap Assets’ enterprise is concentrated on oil and fuel, it has exhibited a extremely risky efficiency report as a result of dramatic cycles of oil and fuel costs. The corporate has incurred materials losses in 4 of the final ten years. Due to this fact, buyers ought to fastidiously establish the stage of the cycle wherein this enterprise operates earlier than investing on this inventory.

Like nearly all oil and fuel producers, Whitecap Assets incurred substantial losses ($3.55 per share) in 2020 as a result of decline in oil and pure fuel costs brought on by the pandemic. Nevertheless, because of the widespread distribution of vaccines worldwide, international oil and fuel consumption recovered in 2021, and the corporate returned to excessive profitability that yr.

Whitecap Assets reported sturdy Q1 2025 outcomes, with income rising to $942 million and web earnings practically tripling to $163 million. Manufacturing averaged 179,051 boe/d—6% larger than final yr and above inside forecasts—pushed by sturdy efficiency from new wells. The corporate generated $48 million in free funds move, decreased web debt to $987 million, and returned $107 million to shareholders by means of dividends.

Whitecap drilled 86 wells in the course of the quarter, with sturdy outcomes throughout each unconventional (Montney and Duvernay) and standard belongings. Glauconite and Wapiti wells outperformed expectations, aided by improved drilling effectivity and infrastructure upgrades. Capital spending totaled $398 million.

A merger with Veren Inc. is anticipated to shut by mid-Might, creating Alberta’s largest Montney and Duvernay landholder. The mixed firm will replace 2025 steerage post-merger and deal with sustaining a powerful steadiness sheet, delivering secure dividends, and concentrating on 3–5% manufacturing progress per share.

Progress Prospects

Whitecap Assets’ proved reserve lifetime is 12.2 years, which is above the business’s common of about 10 years. As well as, because of the favorable traits of its growth areas, Whitecap Assets is quickly rising its reserve base.

Supply: Investor Presentation

A double-digit manufacturing progress price is extraordinarily uncommon within the oil and fuel business. In truth, most oil majors, corresponding to Exxon Mobil (XOM) and Shell (SHEL), have didn’t develop their output for a number of years in a row. It is a key distinction between Whitecap Assets and most oil and fuel producers.

Then again, Whitecap Assets is delicate to the cycles of the oil and fuel business. That is clearly mirrored within the firm’s risky efficiency report. During the last eight years, Whitecap Assets has grown its earnings per share by a median annual price of solely 6% and has posted losses in 4 of these years.

Whitecap Assets presently enjoys sturdy enterprise momentum, not solely attributable to its excessive manufacturing progress but in addition due to the Ukrainian disaster and the deep manufacturing cuts applied by OPEC in an effort by the cartel to help oil costs. The value of pure fuel has plunged this yr, primarily attributable to an abnormally heat winter, however the price of oil has remained above common. In consequence, Whitecap Assets is more likely to proceed thriving this yr.

Given the optimistic enterprise momentum, the cyclical nature of Whitecap Assets’ enterprise, and the excessive comparability base from final yr, we count on roughly flat or decrease earnings per share over the following 5 years.

Dividend & Valuation Evaluation

Whitecap Assets is presently providing an above-average dividend yield of 8.9%, practically six occasions the yield of the S&P 500. The inventory is thus an thrilling candidate for income-oriented buyers, however the latter must be conscious that the dividend is just not secure as a result of cyclical nature of the oil and fuel business.

Whitecap Assets presently has an exceptionally low payout ratio of 59.3% and a stable steadiness sheet, with a long-term debt-to-capital ratio of 13.7%. In consequence, the inventory’s dividend has a margin of security for the foreseeable future.

Then again, attributable to Whitecap Assets’ cyclical enterprise, its dividend is just not totally secure. Moreover, U.S. buyers must be conscious that the dividend acquired from this inventory relies on the alternate price between the Canadian greenback and the U.S. greenback.

In reference to the valuation, Whitecap Assets has traded at solely 5.6 occasions its earnings per share during the last 12 months, primarily as a result of above-average earnings it posted final yr. We assume a good price-to-earnings ratio of 5.0 for the inventory. Due to this fact, the present earnings a number of is larger than our assumed truthful price-to-earnings ratio. If the inventory trades at its truthful valuation degree in 5 years, it can have a headwind of a 2.3% annualized loss in its returns.

Contemplating the flat earnings per share, the 8.9% dividend yield, and a 2.3% annualized compression of the valuation degree, Whitecap Assets may supply a median annual complete return of roughly 6.6% over the following 5 years. This isn’t a good anticipated return, however we suggest ready for a decrease entry level to boost the margin of security and improve the anticipated return.

Remaining Ideas

Whitecap Assets has a lot better prospects for rising its manufacturing and reserves than most of its friends and is providing an above-average dividend yield of 8.9%. Because of its wholesome steadiness sheet, the corporate is just not more likely to lower its dividend within the close to future, which is anticipated to entice some income-oriented buyers.

Nevertheless, the corporate’s efficiency report has been extremely risky attributable to its enterprise cycles. Due to this fact, buyers ought to look ahead to a extra engaging entry level.

Furthermore, Whitecap Assets is characterised by low buying and selling quantity. Which means it might be onerous to ascertain or promote a big place on this inventory.

Don’t miss the assets beneath for extra month-to-month dividend inventory investing analysis.

And see the assets beneath for extra compelling funding concepts for dividend progress shares and/or high-yield funding securities.