Revealed on April thirtieth, 2025 by Felix Martinez
Tamarack Valley Power (TNEYF) has two interesting funding traits:
#1: It’s providing an above-average dividend yield of 4.1%, which is roughly 3 times the common dividend yield of the S&P 500.#2: It pays dividends month-to-month as an alternative of quarterly.Associated: Checklist of month-to-month dividend shares
You may obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter like dividend yield and payout ratio) by clicking on the hyperlink under:
Tamarack Valley Power’s mixture of an above-average dividend yield and a month-to-month dividend makes it a horny possibility for particular person buyers.
However there’s extra to the corporate than simply these components. Maintain studying this text to be taught extra about Tamarack Valley Power.
Enterprise Overview
Tamarack Valley Power engages within the acquisition, exploration, growth, and manufacturing of oil, pure gasoline, and pure gasoline liquids within the Western Canadian Sedimentary Basin. Its oil and pure gasoline properties are the Cardium, Clearwater, Charlie Lake, and Enhanced Oil Restoration property positioned within the province of Alberta, Canada.
The corporate was previously often called Tango Power and adjusted its title to Tamarack Valley Power in June 2010. Tamarack Valley Power was fashioned in 2002 and is headquartered in Calgary, Canada.
As an oil and gasoline producer, Tamarack Valley Power is extremely cyclical because of the dramatic fluctuations in oil and gasoline costs. The corporate produces liquids and gases in an approximate ratio of 85/15 and is extremely delicate to the fluctuations within the worth of oil. It has reported losses in 6 of the final 10 years and initiated a dividend solely firstly of 2022.
Alternatively, Tamarack Valley Power has a number of benefits in comparison with well-known oil and gasoline producers. Most oil and gasoline producers have been struggling to replenish their reserves because of the pure decline of their producing wells.
Supply: Investor Presentation
Tamarack delivered sturdy 2024 outcomes with This autumn manufacturing averaging 66,104 boe/day and full-year free funds move of $386.9 million. Regardless of weaker commodity costs, the corporate returned over $215 million to shareholders by dividends and buybacks, retiring 6% of its float. Internet debt dropped 21% to $775.4 million, decreasing the online debt-to-adjusted funds move ratio to 0.9 from 1.3.
The Clearwater Infrastructure Partnership expanded to incorporate a thirteenth Indigenous neighborhood, bringing complete asset contributions to $220.8 million and producing over $180 million in money to cut back debt. Tamarack invested $439.3 million in growth, drilling over 100 Clearwater wells and boosting capital effectivity. Reserves rose 6% to 238.3 million boe, changing 179% of annual manufacturing.
Margins improved as a result of stronger heavy oil pricing, decrease prices, and better capital effectivity. Tamarack maintained its give attention to shareholder returns, growing its dividend and ending the yr with $423.4 million in out there credit score, plus entry to an extra $125 million.
Progress Prospects
Tamarack Valley Power has posted one of many highest reserve development charges in its peer group lately. Even higher, the corporate has ample room for future development.
Supply: Investor Presentation
Exceptionally excessive returns characterize the reserves on this space. It’s thus evident that Tamarack Valley Power has a big aggressive benefit when in comparison with its friends.
Furthermore, the corporate has a promising 5-year development plan:
Supply: Investor Presentation
It expects to develop its manufacturing at a median annual price of three%-5% and roughly double its free funds move per share over the following 5 years, partly due to materials share repurchases. Not one of the well-known oil majors has such an bold development plan.
Alternatively, as an oil and gasoline producer, Tamarack Valley Power is extremely delicate to the fluctuations in oil and gasoline costs.
Due to the rally of the costs of oil and gasoline to 13-year highs in 2022, Tamarack Valley Power posted earnings per share of $0.55 in 2022. Nevertheless, the worth of oil has slumped practically 50% from its highs in 2022, whereas the worth of pure gasoline has additionally collapsed.
Given the promising development plan of Tamarack Valley Power, in addition to the extremely cyclical nature of the oil and gasoline business, we anticipate the earnings per share of Tamarack Valley Power to extend considerably this yr to $0.40 per share from $0.21 per share in 2024
Dividend & Valuation Evaluation
Tamarack Valley Power is presently providing an above-average dividend yield of 4.1%, which is about 3 times the yield of the S&P 500. The inventory is an fascinating candidate for earnings buyers, however they need to remember that the dividend is way from secure because of the dramatic worth cycles of oil and gasoline.
Tamarack Valley Power has an affordable payout ratio of 27%. Moreover, the corporate maintains a strong monetary place.
Furthermore, it’s vital to notice that Tamarack Valley Power initiated a dividend solely in 2022, amid multi-year excessive commodity costs. It failed to supply a dividend within the previous years, because it incurred materials losses in most of these years. Due to this fact, it’s evident that the corporate’s dividend is way from secure.
In reference to the valuation, Tamarack Valley Power is presently buying and selling for 9.9 instances its anticipated earnings per share this yr. Given the excessive cyclicality of the corporate, we assume a good price-to-earnings ratio of 12.5, which is a typical mid-cycle valuation stage for oil and gasoline producers.
Due to this fact, the present earnings a number of is way decrease than our assumed truthful price-to-earnings ratio. If the inventory trades at its truthful valuation stage in 5 years, it is going to incur a 5% annualized return.
Considering the 6.0% annual development of earnings per share, the 4.1% present dividend yield, and a 5% annualized tailwind of valuation stage, Tamarack Valley Power might provide a 15.1% common annual complete return over the following 5 years.
The anticipated return indicators that the inventory is an efficient long-term funding, as we’ve handed the height of the oil and gasoline business’s cycle.
Last Ideas
Tamarack Valley Power has been thriving since early 2022, due to an excellent setting of above-average oil costs. The inventory is providing an above-average dividend yield of 4.1%, with an honest payout ratio of 27%. Consequently, it’s more likely to entice some income-oriented buyers.
Nevertheless, the corporate has confirmed extremely weak to the fluctuations within the worth of oil. As this worth seems to have handed its peak for good, the inventory is presently extremely dangerous.
Furthermore, Tamarack Valley Power is characterised by low buying and selling quantity. Because of this it’s arduous to determine or promote a big place on this inventory.
Further Studying
Don’t miss the sources under for extra month-to-month dividend inventory investing analysis:
And see the sources under for extra compelling funding concepts for dividend development shares and/or high-yield funding securities:
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