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Suncor Has the Lowest Dividend Yield among the Six Leading Stocks

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Dec. 21 2018, Published 3:29 p.m. ET

Suncor’s dividend yield

Suncor Energy (SU) is the last stock on our list of the top six integrated energy stocks by dividend yield. The company’s market cap of ~$46 billion also makes it the smallest among its peers.

Suncor’s dividend yield currently stands at 3.8%. In the current quarter, Suncor will pay a dividend of 0.36 Canadian dollars per share (~$0.27 per share). SU has consistently paid dividends throughout the oil price volatility it’s witnessed over the past few years. Its dividend has also risen in the period. Three years ago, it made a dividend payment of 0.29 Canadian dollars per share. In the same period, its stock price has risen 11%.

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Valuations

Suncor is trading at a forward PE multiple of 10.4x, below the peer average forward PE. However, Suncor is trading above the peer average forward EV-to-EBITDA (enterprise value-to-EBITDA) multiple. The stock has put up mixed valuations due to its improving financials partly offset by its lower growth expectations.

Suncor’s financials have been improving for the past several quarters. In the third quarter, Suncor’s adjusted earnings and funds from operations rose year-over-year. Moreover, its total debt-to-total capital ratio of 27% stood below the global industry average—a favorable position.

Though Suncor has kept its focus on capex and acquisition activities, in the current year, the company’s earnings growth is expected to be lower than the peer average. Analysts expect Suncor’s earnings to rise 62%, below the average of 69%.

The Government of Alberta recently announced oil production cuts for 2019 to deal with the supply glut in the region. The move has negatively affected Suncor and its valuations, as it has already been bearing the brunt of lower oil prices in the quarter, like all other integrated energy stocks.

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