Canadian Natural Resources

On my other blog I am today writing about Cash Flow Statements ...continue...

I own this stock of Canadian Natural Resources (TSX-CNQ, NYSE-CNQ). I have been tracking this stock since 2008. This stock is on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices).

It is a dividend growth stock. The 5 year median dividend yield is just 0.72%. The dividend growth rate is 20% per year over the past 5 years and 21% per year over the past 10 years. The 5 year median Dividend Payout Ratios are 14% for earnings and 5% for cash flow. The DPR for 2013 are expected to be higher at 20% for earnings and 8% for cash flow. The current dividend yield is 1.54%. (This is why I bought another 100 shares of this stock today. I do not have much money any longer to buy shares, but this stock is very out of favour at the moment.)

I had bought some shares late last year when the dividend yield was also good. At that time it was 1.32% and 80% above the 5 year median dividend yield. Now the current dividend yield is some 113% above the 5 year median dividend yield. The company has just raised the dividends and the increase is a 19% increase.

As I said above I just bought some of this stock late last year. The stock price is just up 2.5%. I do not expect much in the way of capital gains at the moment. The oil and gas stocks are very out of favour now. However, I am buying this stock for the future.

For shareholders who bought this stock 5 years ago, the total return is negative at 3.75% per year with dividends at .88% per year and a capital loss of 4.62% per year. For shareholders who bought this stock 10 years ago, the total return would be 18.68% per year, with dividends at 1.47% per year and capital gain at 17.21% per year. This is never going to be a great dividend producer; the value of this stock lays in the increase in dividends each year.

The outstanding shares have not really changed over the past 5 and 10 years. Outstanding shares have increased due to stock options and decreased due to buy backs. Revenue has increased by 5.24% per year and 14.77% per year over the past 5 and 10 years. Revenue per share has increased by 5% and 14.54% per year over the past 5 and 10 years.

The Earnings per Share is down by 6.6% per year over the past 5 years and up by 12.31% over the past 10 years. However, EPS does fluctuate on this stock. If you look at 5 year running averages, EPS is up by 7.17% per year and 17.72% per year over the past 5 and 10 years. The problem with looking at just the EPS 5 years ago and 10 years ago, you may not get an adequate picture of earnings over time as the EPS at 5 or 10 year period could be usually low or high compared with surrounding earnings for these periods.

Cash Flow per Share has decreased by 1.57% per year over the past 5 years and increased by 9.98% per year over the past 10 years. Here again you get a different picture if you look at 5 year running averages. With the 5 year running averages, the CFPS has increased by 6.18% and 14.97% per year over the past 5 and 10 years.

Book Value per Share has increased by 12.50% and 17.20% per year over the past 5 and 10 years.

When you look at Return on Equity for 2012 it is rather low at 7.8%. The ROE on comprehensive income is slightly better, but still low at 7.9%. 2012 was not a great year for this stock. Canadian oil is relatively cheap at present.

The Liquidity Ratio on this stock has never been great. The current one is just 0.48. If you exclude the current portion of the long term debt the Liquidity Ratio rises to just 0.63. This means that current assets cannot cover current liability. The company is relying on cash flow to pay current debt. If you look at the current Liquidity Ratio with cash flow after dividends, the ratio rises to 1.93, a very good value.

The Debt Ratio (comparing total assets and total liabilities) you get a very good ratio of 1.98. The current Leverage and Debt/Equity Ratios are fine at 2.02 and 1.02.

No matter how much some people want us to get off oil and especially oil from the oil sands; this is not going to happen anytime soon. I know that there are problems in getting Canadian oil to market because of the lack of pipelines. If it is not by pipelines, oil will be shipped somehow. I just saw the other day a train that must have had at least 100 oil tanker cars passing through Toronto, just north of where I live. I read the other say that Warren Buffet is invested in a railway company that has thousands of oil tanker cars on order.

I think that we will get off oil at some point, but not today. This is, of course, a risky stock because it is a resource stock. I do not invest much in resource stocks, but could not resist a good stock at relatively cheap prices that has such great dividend increases. See my spreadsheet at cnq.htm.

Canadian Natural Resources Ltd. is a senior oil and natural gas exploration, development and production company. The Company's operations are focused in Western Canada, in the U.K. sector of the North Sea and in offshore West Africa. Its web site is here CDN Natural Resources.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.