Canadian Natural Resources

Sound bite for Twitter and StockTwits is: Dividend Growth Resource Stock. Currently the dividend increases have slowed down a lot. However, I am sure that when the price of oil recovers, so will the dividend increases for this stock. See my spreadsheet at cnq.htm.

I own this stock of Canadian Natural Resources (TSX-CNQ, NYSE-CNQ). I first bought CNQ in September 2012 because the dividend yield was relatively high. The 5 and 10 year median dividend yields were 0.73% and 0.75%. The current one was at 1.31% and I got it with a yield of 1.32%. I sold some TransAlta to buy this stock. In April 2013 I bought more shares of this stock because the yield is now at 1.54%.

This company only started to pay dividends in 2001. Up until 2011, dividends were mainly below 1%. The dividend is currently at 2.4% and the 5 year median is just 1.22%. This company has a great record of dividend increases with the 5 and 10 year growth in dividends is at 33% and 25% per year. On the other hand the most recent dividend increase is the lowest ever at just 2.2%.

Under recently, the Dividend Payout Ratios for EPS was very low. In 2011 the DPR for EPS was 14%. In 2015 the DPR for EPS was 24.4%. It is expected to be 481% in 2015 as this company is not expected to earn much in 2015.

The DPR for CFPS has also climbed, but not as much. In 2011 the DPR for CFPS was 6%. In 2015 it was 10.4%. The DPR for CFPS is expected to be around 17% for 2015. This company also has an Adjusted EPS value which adjusts EPS for certain items of a non-operational nature. The DPR for Adjusted EPS was 25% for 2015 and is expected to be 28% for 2015.

The outstanding shares have not changed over the past 5 and 10 years. Outstanding shares have increased due to Stock Options and Share Issues and have decreased because of Buy Backs. Revenue, Earnings and Cash flow has had good growth over the past 5 and 10 years.

Revenue per Share has grown at 13.8% and 10.7% per year over the past 5 and 10 years. EPS has grown by 20% and 10.7% per year over the past 5 and 10 years. CFPS has grown at 8.6% and 9.3% per year over the past 5 and 10 years.

However, analysts expect that 2015 will not be a good year for this company and Revenue, Earnings and Cash Flow are all expected to decline in 2015. The following year, 2016 is expected to be better. Certainly the first quarter for 2015 was not good with the company having an EPS loss and lower Revenues and Cash Flows.

It is interesting to note that growth in Adjusted EPS has not been good over the past 5 and 10 years. Growth has been moderate to low. The Adjusted EPS growth is at 7% and 2.9% per year over the past 5 and 10 years.

Until 2009 this company had a number of years of over 10% Return on Equity. Over the past 5 years, this has only occurred twice and 2015 was one of these years. The ROE for 2014 is at 13.6%, but the 5 year median is just 8.8%. The ROE on comprehensive income was also 13.6% in 2014 and this suggests that the earnings are of good quality. The 5 year median ROE on comprehensive income is 8.7%, a value close to that on net income.

The Liquidity Ratio has always been low on this stock. The 2014 ratio is 0.68. However, when you add in cash flow after dividends, this ratio has been very good. The ratio for 2014 was 2.14. The Debt Ratio has been good also with the value in 2014 at 1.92. The Leverage and Debt/Equity Ratios have been a little high with the 2014 ratios at 2.08 and 1.08. I would prefer them to be under 2.00 and under 1.00, respectively, but they are not far off this.

This is the first of two parts. The second part be posted on Monday, May 11, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

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 Canadian 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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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