uploads/2019/03/SU.jpg

Suncor Energy Has the Lowest Dividend Yield

By

Updated

Suncor Energy’s dividend yield

Suncor Energy (SU) is the last stock among the six integrated energy stocks discussed in this series. The company’s market cap of ~$55 billion also makes it the smallest among the six stocks.

Currently, Suncor Energy’s dividend yield is 3.7%. In the current quarter, Suncor will pay a dividend of 0.42 Canadian dollars per share. The company has consistently paid dividends despite oil price volatility in the past few years. The dividends have risen. Three years ago, Suncor Energy made a dividend payment of 0.29 Canadian dollars per share. During the same period, Suncor Energy’s stock price rose 23%.

Article continues below advertisement

Valuations

Suncor Energy trades at a forward PE ratio of 16.6x, which is above the peer average among the six integrated energy stocks. The company trades above the average forward EV-to-EBITDA multiple. The stock has a higher valuation due to its better financials. The higher valuation is partly offset by lower growth expectations.

Suncor Energy’s financials improved in 2018. The company’s operating earnings rose 35% in 2018, while the funds from operations rose 11%. Suncor Energy’s total debt-to-total capital ratio of 28% was below the global industry average—a favorable position.

Although Suncor has focused on its capex and acquisition activities, the company’s earnings are expected to decline in 2019. Analysts expect Suncor’s earnings to fall 5% in 2019. On average, Suncor Energy’s peers are expected to fall 6%. The earnings could fall due to the lower crude oil price estimate for 2019.

Advertisement

More From Market Realist