Freehold Royalties Ltd (FRU.TO)

(A Top Pick Feb 8/17, Up 8%) It is going to boost its dividend each year. You should get 10% total return. It is a nice conservative way to play a volatile sector.

(A Top Pick August 1/17 - Down 11.9%). A buying opportunity. Oil price is higher. Gas price is down but they have improved their franchise with some good deals. Pristine balance sheet. One of the cheapest royalties plays you can find in the market. Great assets. Dividend yield of 4%. Pay you to wait.

He does not hold a significant position in this at the moment. If you know where oil prices will be, you will know what to do. He thinks management may be looking to divest themselves of operating assets in favour of holding only royalty assets. If that was done, he believes, the company could get a positive re-valuation rating. He is therefore watching this as a potential buy soon.

He says this company is part of the energy sector pounding. He does like short term energy plays, especially when it could be bought near two year lows. He does not have much experience with this one, but likes the yield.

(A Top Pick December 1/17. Down -14%.) He considered this a low-volatility oil company because it is a royalty company. He is sticking with it as a lower-beta oil play even though it has sold off more than he expected.

Good solid yield. Well managed company. Had owned it in the past. Regret selling it. Not in drilling and the actual production. They just buy into existing productions and pay reasonable amounts.

(A Top Pick May 15/17. Up 7%.) This probably still has more potential. Royalty companies are the definition of low cost providers. This has about a 4% dividend yield, which should go up a little every year. Trades at probably half the valuation of its comparable PrairieSky (PSK-T). Very attractive and has lots of upside.

One reason he likes this is that oil is over $60. It is very investable again. Money comes into the energy sector finally, in 2018. One of the few Canadian energy companies that raised its dividend, and he expects a similar one in March. A safe way to play energy because 95% of their business is royalties. They don't actually produce oil. A very stable earnings base. The stock is undervalued and under owned, so thinks it is a $16-$18 stock. Dividend yield of 4.3%. (Analysts' price target is $18.)

This is a good way of smoothing your returns and still get some exposure to energy. If you want to take an entry position into the energy sector with less aggression, this is a good way to get into the energy sector. (Analysts’ target: $17.75)

This operates in the capital-intensive business of oil and gas but, because they are a royalty company, their capital intensive is extremely low. They have the lowest operating cost in the industry. Has a 6% free cash flow yield. Dividend yield of 3.9%, which he expects to be increased again next year. (Analysts’ price target is $17.75.)

They pay for the royalty on the land for which they did a deal with the producer. He sold a couple of years ago when he sold most of his energy. It does not have the torque of a producer. It is a good way to play if you are not sure where the price is going. You could hold it for the dividend.

(A Top Pick Feb 8/17. Up 27%.) A safer way of playing energy. Has been collecting a 4% yield. Volumes are picking up. The lands they are collecting royalties on, and with $50 oil, they’re starting to drill more, so royalty cheques are getting bigger. It was a safer way to play the rebound in energy. Still thinks it is undervalued and is a good holding.

(A Top Pick Dec 5/16. Up 11%.) An owner of royalty interests, primarily in Western Canada, the #2 player after PrairieSky (PSK-T). Thinks it is cheaper than PrairieSky and pays a better dividend. Expects it to go higher in the next year.

(A Top Pick Aug 2/16. Up 38%.) Thinks 90% of their revenues now are from royalties. They’ve done a good job of getting capital deployed on their land so that the cash flow can grow. Had a dividend increase, and could potentially have another before year-end. Dividend yield of over 4%.

WCP vs. FRU-T. He prefers Freehold. It is a safer way to play energy in these times. They put a great quarter out last night, raised their dividend. If oil went to $55-$60 you would make more money in WCP-T. FRU-T has a low payout ratio.