Q: Hi 5i team,
My question is on CNQ. They have a dividend growth rate of something like 20% annually over the past 20 years, which is remarkable.
Realizing that past performance is no guarantee of future returns, how would you evaluate the company's dividend growth prospects for next 20?
If you were to assess it on a confidence scale of 1-10, based on what you know of the company, what would your assessment be?
Thanks!
Ryan
My question is on CNQ. They have a dividend growth rate of something like 20% annually over the past 20 years, which is remarkable.
Realizing that past performance is no guarantee of future returns, how would you evaluate the company's dividend growth prospects for next 20?
If you were to assess it on a confidence scale of 1-10, based on what you know of the company, what would your assessment be?
Thanks!
Ryan
5i Research Answer:
We like CNQ a lot; it is very well-managed, and has managed cyclicality well. In 2004 the dividend was 1.25 cents, it is now 52.5 cents. Of course, the price of oil and gas is going to play a very big role in any prediction here. But we would note the price of oil was about $41 in 2004 and is $71 now, so CNQ has seen the dividend surge when oil didn't even double. CNQ's five-year dividend growth rate is 23%. For the next 20 years, we do not think it will rise at the same rate as the past 20, but certainly we might forecast 5% annual growth, if not a bit more. On a ranking scale, we would give the company a 9 for a cyclical company.