Investment Q&A

Q: You have indicated the payout ratio for PEY based on cash flow is 42%. Morningstar says the payout ratio is 153% for dividend and capital spending. When judging the safety of the dividend why would the capital spending not be considered? When the dividend and capital spending are not covered by cash flow is the difference made up from borrowings?
Thanks
Mike

Q: An interesting summary of Cdn. Nat Gas prospects in general and Peyto
below:
https://www.investorvillage.com/groups.asp?mb=6781&mn=91904&pt=msg&mid=17726895
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Q: Hi 5i,

Which of these two companies do you prefer? Is there a different nat gas stock you'd prefer?

Thanks!

Q: Hello Peter and Team, in a response to Michael (November 6th) you say that Peyto’s payout ratio is 41%. Using the Peyto data provided by TMX Money, and after a quick calculation I get a payout ratio that would be 153% (0.110 DIV x 12 months / 0.86 EPS). Could you tell me where is my mistake in making this calculation? In the event that the payout ratio is in fact 153%, then would you consided the dividend at risk? Best regards, Gervais

Q: Would you consider Peyto Exploration a good value at its current share price?

Q: I am a retired, conservative, dividend-income investor. I normally would describe myself as a "buy and hold" investor, using a "trim and add" strategy that has served me well over the years. I am also aware that one should expect roughly a third of one's stock picks to not work out, although my track record is better than that.

The quandary I am in relates to PEY. Great stock, good management, nice dividend, however poor capital appreciation since I bought in Nov '16. My current allocation to energy is 10% of my equity portfolio. Fortunately PEY has only a small weighting (<2%).

Question 1 = I am down roughly 45% including dividends. We are now in tax loss selling season, so expect some more downside to PEY. I could definitely use the capital loss, to offset significant capital gains this year. Sell now, wait 30 days, rebuy?

Q2 = There is also the "trapped due to no pipeline access" theory...any light to shed on this? If PEY is trapped, is this worth rebuying, until the pipeline issue is remedied? If I wanted to replace PEY with another dividend payer = any suggestions for those that are not "trapped"?

Q3 = I see the average 1 year target price is $27---based on what?

Again, I usually hold for the long term...eventually good stocks work their way through these things...not sure this time. Your thoughts please.

Thanks...Steve

Q: Hello good 5i people,
I haven't owned any energy stocks for years. But I would like to add some. Could you recommend 3-4 top picks in the sector for long term growth?

Thx,
Mike

Q: Hi 5i,

Plz comment on the Q from PEY.

Thanks,
Dave

Q: Hello 5i, I am considering on taking a position in either Peyto or Arc. Could you comment on a comparison of the 2 as to what their payout ratio is and how safe the distribution is also your opinion on these 2 companies. Would you have a better recommendation on an energy company and if so which one. Also on your old website on the right side there was a selection by year and month of questions answered I see that it is now gone or how do I find this info.
Thanks

Q: Hi 5i,

Can you please provide the Quarterly date and numbers for PEY? Is PEY one of your favorite nat gas plays?

Thanks,
Dave

Q: Hi Peter and team
I am down about 40% in both Peyto and Shawcor and would like to use as a tax loss. Could you please suggest one or two replacements. Thanks.
Gary

Q: Good Morning, I am considering buying PEY and ALA for the dividend and a recovery in the oil patch. Firstly, I am considering them because they are good companies with a high dividend that is unlikely to be cut(do you agree?). My other reason is based on my tax situation. Since I have no employment income I can benefit from low or no tax on my dividend. In addition, I have considerable unrealized capital gains in my taxable account. So if PEY and ALA really decline I can sell those stocks and use the loss to offset my capital gains as I realize them. Does this strategy make sense? I have often heard you should not let tax strategies drive your investment thesis but in this case it feels like the risk/reward really improves due to my tax situation. Please comment. Thanks

Q: Good day - What are your best recommended/favorite oil and gas producers at this time? With and without dividend. Is a dividend paying producer something you would consider?

Q: Good Afternoon,
Peyto is looking pretty good today for income with a yield of 7% and only a 41% payout ratio. However, its my understanding that many of their hedges which are protecting this dividend will roll off over the next two years so it will be difficult to hedge going forward in this low gas environment. Have they ever cut their dividend before? What are your thoughts about the sustainability of their dividend going forward with hedges rolling off? Obviously they can still hedge but at much lower prices which may not protect their cash flow sufficient enough to cover the dividend?
Thank-you

Q: Gentlemen
If commodity prices continue at current levels for the foreseeable future, what would be your current ranking, please, of these energy names.... in order of best to worst, to hold for future growth?
I hold for both income and growth.

Q: Peyto has been in a relentless downtrend for at least the last year and yet it is supposedly one of the lowest cost producers. Is it time to bail on this stock as the natural gas price continues to languish with no relief in sight and oil price not much better? Thank you.

Q: I am a retired, conservative dividend-income investor with a company pension, CPP, annuities, Fisgard Capital and the following equities:
1. 17% Mutual funds (RBC Cdn Equity Income, Sentry Cdn Income, Sentry REIT)
2. 10% ETFs (ZLB, XIT, ZWE)
3. 41% stocks (listed above)
4. 32% fixed income (annuities, Fisgard, but not including my pension nor CPP).

I plan to reduce my Sentry Cdn Income holding from 9% to 5% and purchase ZWC. The benefits would be a) saving $1k in hidden MER fees, b) receiving an extra $1k in dividends and c) a better asset allocation. I like the covered call strategy that ZWC provides, as well as the 30 companies inside the ETF.

Question = is this the right ETF product? Are there other Canadian Covered Call ETF choices that offer this diversified asset mix that I should consider? Are their other ETFs that have slightly less financials, less utilities, and more industrials that would result in a better asset allocation for me?

Thanks for your help...Steve

Q: Hi Peter and Staff
I have a very small weighting in oil and gas and would like to increase it slightly with 1 more name. The two that I own so far are PEY and VET . If I will own 3 for a long term hold ,total return, dividends and capital gains, are those two fine to be 2 of the 3.
If so, please recommend one of the following with your reasoning to add. If you would drop PEY or VET in order to have 2 of the ones listed below, please advise

CNQ,FUR,RRX,SU,TOG or WCP

Thanks for all you do
Dennis

Q: If oil stocks are in the process of forming a bottom, can you list some companies you would favour (small, med, large, oil and/or gas) as a potential buy list? Thanks!

Q: Hi Peter: Is Peyto exploration's dividend sustainable given the world wide oversupply of natural gas and Peyto not holding any cash? is this (not having cash) normal for these types of companies?