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Suncor Energy Inc. (SU)
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Canadian Natural Resources Limited (CNQ)
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Tourmaline Oil Corp. (TOU)
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Freehold Royalties Ltd. (FRU)
Q: What do you think of Fru and its future ?Is it a buy, hold or sell?
I have a small account in a non registered account income and i am thinking to add more (for income ) .Or you suggest to sell and buy something else ? Thanks !
I have a small account in a non registered account income and i am thinking to add more (for income ) .Or you suggest to sell and buy something else ? Thanks !
5i Research Answer:
FRU is a royalty company that owns interests in crude oil, and natural gas properties. FRU’s operating results will continue to be dependent on the prices of commodities. The business model generates decent cash flow which supports a monthly dividend with a yield of around 7.9%, but the dividend payment of course also depends on oil and gas prices. It has lowered its dividend several times historically (not just in the pandemic). FRU is trading at 8.3x Forward P/E, with consistent production growth over the years, and the valuation is quite cheap for a royalty company. We think FRU is a decent name for investors to get exposure to the energy sector. We would be comfortable buying/owning it. Note we do like CNQ, SU, TOU 'better' overall.