Vermilion Energy Inc. (VEMTF.PK) is a monthly dividend paying Canadian energy stock. I respect companies that are focused upon my bottom line, which is paying a regular dividend so I can pay my own bills! This is the real world the last time I checked. My focus is to live comfortably and know precisely what I own and what I want to avoid to own.
Vermillion's business model is to provide a growing dividend stream through a global collection of energy assets. The company is well-respected in the energy sector, and has proven itself to be a good steward of investor capital. The company's business model is to grow earnings, dividends at, per page 30: 10% per-year.
Here are some key corporate investing statistics:
- The monthly dividend offers a "steady-eddy" 5.3% dividend yield,
- The market capitalization is approximately U.S. $3.8-billion,
- Management owns approximately 9%,
- June 30, 2011 net debt is approximately $435-million,
- The December 31st, 2010 reserve life is 11-years.
Dividend History and Rational to Buy
Vermillion’s administration of dividends constitutes of paying a monthly dividend to shareholders that is affirmed of credible at a perennial basis. Its cardinal objectives include delivering steady dividends along with managing a sound balance sheet, reinvesting the acquired capital in a way that is certain to maximize production and the values of assets.
By sticking to a financially moderated policy, Vermillion has been able to deliver performances that are firm and feasible, which is due to the proper allocations of funds to each appropriate department, as it helps maintain financial advantage over competition, helping them perpetuate long lasting dividends. This factor encourages the shareholders to invest in Vermillion assured of the reliability and sustenance of their investments.
Hedging Oil Stocks:
I believe in hedging positions. There are zero refunds in the stock market. One must defend for themselves.
In context of hedging, I must be cognizant of what hedges the energy dividend payers already have in place. If I am not confident of the companies' hedges, then I will use an inverse energy exchange-traded-fund to combat weakening oil prices and natural gas prices.
Some securities, such as MV Oil Trust, are completely non-hedged in their oil production. It takes reading through each company's hedging tools to develop an understanding of whether a sharp energy price decline will impair one's stock portfolio.
Vermilion Energy Inc. is an international energy producer, with its headquarters based in Alberta, Canada, branching out to Western Europe and Australia. The company has been a strong dividend payer after its inception. The company has been an industry leader over the past sixteen years, all of which has shown the exemplary performance of the company. They produce thousands of barrels of light sweet crude oil, along with almost BCF of natural gas on a day to day basis from their widespread premises around the globe. Vermillion proudly manages over 90% of its properties with the aid of an outstanding team of employees comprised of deeply committed professionals.
Vermillion was established in 1994, and it has been chronicling its history of quality creations since then. It was operating as an exploration and production company for nine years prior to their transposition into an energy trust in 2003, maintaining an unfluctuating flow of monthly distribution payments to its unit holders. It has also conveyed top quartile total return performance in four out of the past six years. Vermillion has since September 2010 transfigured its trust structure into a corporation, maintaining the same monthly dividends.
Vermillion follows a unique success plan, and the goals they work towards are based on asset base expansion, growth in the 3 main regions in which it is functional, namely Canada, Europe and Australia. Their success philosophy has helped Vermillion thrive over the past 16 years, and during that time it has established itself as a premier on and offshore operator. They also aim to present shareholders with fascinating upside contingencies while narrowing down capital risk, along with retaining distinct balance sheets under their name.
While it was functioning as an energy trust, Vermillion’s prime reserves per unit rose by 30% along with its production per unit which had risen by 3% from 2002 to 2008 alone. Also during this period Vermillion’s coequal group of Canadian energy trusts ascertained that their reserves per unit had actually declined averaging in at 8%, with their production per unit sliding down by 29%.
Vermillion has being paying more than $925 million dollars in distributions to unit holders and has not under any conditions lessened monthly distributions.
Their daily production of energy back in 2010 was 32,132 boe/d, which comprised of 19,941 barrels per day of mostly light sweet crude oil and 73.1 million cubic feet of natural gas from their branches based in Western Canada, Australia, France and the Netherlands.
Industry Peers and a CEF Comparison:
The U.S. fiscal policy has an imbalance of more expenses than revenue. By default, a fiat currency running on a printing press typically results in inflation. I use Gabelli Global Gold, Natural Resources & Income Trust (GGN) as a quick-solution proxy. I wanted to see how Vermillion Energy compared to the closed-end-fund GGN. It was encouraging to see Vermillion Energy, and the entire table outperform the Gabelli Global Gold, Natural Resources & Income Trust 3-year 16.6% total annualized rate-of-return.
- Baytex Energy Corp. (BTE): 69.5% 3-year total annualized rate-of-return,
- Provident Energy Ltd. (PVX): 35.5% 3-year total annualized rate-of-return,
- Penn West Petroleum Ltd. (PWE): 26.7% 3-year total annualized rate-of-return,
- Pengrowth Energy Corporation (PGH): 18.5% 3-year total annualized rate-of-return,
- Enerplus Corporation (ERF): 18.1% 3-year total annualized rate-of-return.
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