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%. In April 2013 I bought more shares of this stock because the yield is now at 1.54%. I bought another 100 shares in 2020 because the yield was 11.63%.
When I was updating my spreadsheet, I noticed that I am doing much better than last year on total return. Last year at this time my investment had a negative return. This year my total return is 8.59% per year with 5.61% from capital gains and 2.98% from dividends. There was an earnings loss because of lower Revenue.
The dividend yields are currently moderate with dividend growth moderate. I have 19 years of data on this company and during that time they have not decreased dividends in any year. The current dividend is moderate (2% to 4% range) with a current dividend yield of 4.95%. The 5 and 10 median dividend yields are also moderate at 3.38% and 2.66%. The historical median dividend yield is low (below 2%) at 1.00%. Before 2011, the dividend yield was often low at below 1%.
The dividend increases for the last 5 years is moderate (8% to 14% ranges) at 12.5%. The last dividend increase was in 2021 and it was for 10.6%. In prior periods the dividend growth was good (15% and over). The dividend was increased in 2021 and this points to the fact that management thinks times will get better.
The Dividend Payout Ratios (DPR) need improving and analyst think this will happen. The DPR for EPS in 2020 cannot be calculated because of the earnings loss. Analysts expect the DPR to EPS to improve over the next few years. The DPR for EPS for 5 year coverage is 80%. The DPR for CFPS for 2020 is 38% with 5 year coverage at 21%. The DPR for Free Cash Flow for 2020 is 91% with 5 year coverage at 48%.
Debt Ratios are fine. The Long Term Debt/Market Cap for 2020 is 0.56 and improving currently to 0.45. The Liquidity Ratio for 2020 is 0.86. Adding in cash flow after dividends it is 1.40. The Debt Ratio is 1.75. The Leverage and Debt/Equity Ratios 2.32 and 1.32 respectively.
The Total Return per year is shown below for years of 5 to 30 to the end of 2020. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 12.52% | 4.45% | 0.24% | 4.21% |
| 2010 | 10 | 19.51% | -1.09% | -3.65% | 2.56% |
| 2005 | 15 | 19.56% | 2.51% | 0.33% | 2.18% |
| 2000 | 20 | 21.62% | 12.14% | 9.28% | 2.87% |
| 1995 | 25 | 12.94% | 10.54% | 2.41% | |
| 1990 | 30 | 21.16% | 17.88% | 3.28% |
Another way to look at this stock is to use past data, and look at dividend yield on original investments after 5 to 25 years. I am also looking at how much of the stock cost is covered by dividends after 5 to 20 years. In the chart below I show the numbers for this stock. For example, if you bought this stock 10 years ago at the median price, you would have a current yield on your original investment of 4.67% and 27.94% of your original cost would have now been paid by dividends.
| Years | Yield | Cost Cov |
|---|---|---|
| 5 | 5.34% | 21.48% |
| 10 | 4.67% | 27.94% |
| 15 | 6.16% | 40.82% |
| 20 | 33.27% | 229.31% |
| 25 | 50.06% | 346.14% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.63, 7.96 and 9.29. The corresponding 10 year ratios are 10.47, 13.43 and 15.51. The corresponding historical ratios are 10.88, 15.34 and 17.28. The current P/E Ratio is 12.10 based on a stock price of $37.98 and EPS estimate for 2021 of $3.14. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $43.96. The 10 year low, median, and high median Price/Graham Price Ratios are 0.80, 1.02 and 1.30. The current P/GP Ratio is 86 based on a stock price of $37.98. This ratio is between the 10 year low median and median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.47. The current P/B Ratio is 1.39 based on Book Value of $32,380M, Book Value per Share of $27.35, and a stock price of $37.98. The current ratio is 5.6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.20. The current ratio is 4.01 based on Cash Flow per Share estimate of $9.47, Cash Flow of $11,200M and a stock price of $37.98. The current ratio is 35% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.00%. The current dividend yield is 4.95% based on dividends of $1.88 and a stock price of $37.98. The current yield is 395% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 1.00%. The current dividend yield is 2.66% based on dividends of $1.88 and a stock price of $37.98. The current yield is 86% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 2.19. The current P/S Ratio is 1.73 based on a stock price of $37.98, Revenue estimate for 2021 of 23,862M, and Revenue per Share of $21.97. The current P/S Ratio is 21% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. Both dividend yield tests point to this as does the P/S Ratio test. Some of tests mostly show the stock price this and others show a stock price that is reasonable but below the median.
Is it a good company at a reasonable price? I think that this stock price is reasonable, if not cheap. The is in the oil and gas industry, so is high risk and not for everyone. If you want exposure to this industry, this might be a good stock to buy.
When I look at analysts’ recommendations, I find Strong Buy (8), Buy (10) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $47.40. This implies a total return of 29.75% with 4.95% from dividends and 24.80% from capital gains.
A number of analysts on Stock Chase think this is a good time to buy this stock. Karen Thomas on Motley Fool thinks Canadian Natural Resources is a high quality energy stock and trading at a bargain price. The executive summary on gives this stock 3 stars out of 5 on Simply Wall Street and list 3 risks with this stock. A writer on Simply Wall Street does not like the fact that the company paid a dividend last year that it could not afford. Jonathan Weber on Seeking Alpha thinks this company is a cash flow monster.
Canadian Natural Resources is one of the largest oil, and natural gas producers in western Canada, supplemented by operations in the North Sea and Offshore Africa. The company's portfolio includes light and medium oil, heavy oil, bitumen, synthetic oil, natural gas liquids, and natural gas. Its web site is here Canadian Natural Resources.
The last stock I wrote about was about was Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) ... learn more. The next stock I will write about will be Barclays PLC ADR (LSE-BARC, NYSE-BCS) ... learn more on Monday, April 26, 2021 around 5 pm.
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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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