Canadian Oil Sands

I do not own this stock Canadian Oil Sands (TSX-COS, OTC-COSWF). I am reviewing this stock because when anyone talks about investing in Canadian Oil Sands, this is the stock that seems to be mentioned first. As with some other investment in oil companies, if the dividend is good, then it will vary according to the price of oil.

The current dividend is good at 6.7% and this stock has a 5 year median dividend of 6.2%. I have dividend information going back to 1996. Over that time dividends have both gone up and down. Over the past 5 years dividends have decline by 3.9% per year. Over the past 10 years dividends have increased by 12.9% per year.

Another way to look at dividends is to see what you might be earning on your original purchase price after 5 or 10. For this stock the median current return after 5 and 10 years is 8.9% and 21%.

When I look at the 5 year median Dividend Payout Ratio it looks a bit high at 101%. However, if you look at the DPR with 5 year average dividend and 5 year average EPS, the DPR is 87%. The 5 year median DPR for cash flow is fine at 57%.

The total return over the past 5 years to the end of 2012 is a loss of 6.42% per year with a capital loss of 12.22% per year and dividend income at 5.81% per year. The 5 year total return to date is better, coming in at 6.05% per year with a capital loss of 0.2% per year and dividends at 6.25% per year. The total return for the last 10 years to the end of 2012 and to date is very similar. The total return to date is at 19.19% per year with 8.91% per year in capital gains and $10.28% per year in dividends.

The outstanding shares have increased by 0.2% per year and 5.33% per year over the past 5 and 10 years. The shares have increased due to stock options, DRIP and Share Issues. If you look at revenue per share growth using the 5 year running averages, it has grown at the rate of 11% and 15% per year over the past 5 and 10 years.

Earnings growth is not as strong. Using the 5 year running averages, I get growth of 7.8% and 14% per year over the past 5 and 10 years. Cash Flow per share growth is also quite good looking at the 5 year running averages, with growth at 9.7% and 15% per year over the past 5 and 10 years.

The Return on Equity has mostly been above 10% with the 5 year median at the end of 2012 at 22.4%. The ROE on comprehensive income is similar at 22.3%.

Debt ratios are current good, with the Liquidity Ratio at 1.80 at the end of 2012, but dropping lower in the 3rd quarter to just 1.24. The Debt Ratio is very good 1.80 for 2012 and 1.87 for the 3rd quarterly report. The current Leverage and Debt/Equity Ratios at 2.15 and 1.15 are a little high, but not unusual for an energy producer.

With this stock, if can afford to take the risk of investing in an energy producer and can put up with variable dividends, you can make quite good dividends over time. See my spreadsheet at cos.htm.

This is the first of two parts. Second part will be posted on Wednesday, November 20, 2013 and will be available here.

Canadian Oil Sands Trust provides a pure investment opportunity in the oil sands through its 36.74% interest in the Syncrude Project. Syncrude is an experienced oil sands operator, producing a high-quality crude oil for the past 30 years. With large, bitumen-rich leases located in the sweet spot of the Athabasca oil sands deposit and a fully integrated upgrading facility that produces 100% light, sweet crude oil, the quality of their Syncrude asset is very good. Its web site is here CDN Oil Sands.

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.