Q: Hi
Is cardinal energy LTD a safe buy at it's present price and is it's dividend safe and do they raise their divends?
Thank you
John
Is cardinal energy LTD a safe buy at it's present price and is it's dividend safe and do they raise their divends?
Thank you
John
5i Research Answer:
CJ is always going to be cyclical, but it has a very strong balance sheet and good cash flow. Dividend payout ratio is less than 30%, but cash flow can change quickly if commodity prices drop. But we see no real problem with the dividend, but it is of course not guaranteed, and with 10%+ yield investors do seem concerned. While we are not overly worried, we would not use the word 'safe' for the dividend of any oil and gas stock. Cash flow and earnings will drop this year on lower pricing. The stock is cheap, but with little growth expected we would rate it a HOLD and not a BUY.