Freehold Royalties Ltd (FRU.TO)

Very similar characteristics to PrairieSky (PSK-T). Historically people preferred PrairieSky because it was bigger and was absolutely a 100% pure royalty story. This one has had some working interest properties, and they are now getting rid of those, and is already 90% royalties, and will soon be 100%. Dividend yield of 4.2%. (Analysts’ price target is $16.50.)

(A Top Pick July 25/16. Up 16.39%.) He was happy to see them increase their dividend this year. It still trades at a big discount to PrairieSky (PSK-T) even though their operating metrics are in line. A good, low risk way to play an oil/gas recovery, and get paid while you wait.

A royalty company which goes up and down with oil prices. They increased their dividend this year. The 4.4% dividend yield is attractive.

Energy prices are slowly gravitating upwards, but we are still probably a year or 2 sideways in oil prices. The key to successful investing is keeping costs low, and you can’t get lower costs than what the royalty companies have. This company has a great portfolio of royalty properties. Dividend yield of 4.3%. (Analysts’ price target is $16.75)

A royalty trust with excellent downside protection. Their production fell, but their balance sheet was very sound. She sees a lot of opportunity here. They recently had a dividend increase. It has lots of potential for upside.

This has exposure to oil, which was the volatility in the stock in the last 1.5 years. As a royalty producer, it has almost zero CapX and very low leverage, so it is more defensive relative to other oil producers. Expects there will be a dividend increase, if not in Q1, then in Q2.This has exposure to oil, which was the volatility in the stock in the last 1.5 years. As a royalty producer, it has almost zero CapX and very low leverage, so it is more defensive relative to other oil producers. Expects there will be a dividend increase, if not in Q1, then in Q2.

A Canadian oil/gas royalty company. Do the drilling on about 10% of their business, and on the other 90% other people do the drilling and spend the CapX, and they just get a royalty off the top line. Now that oil is over $50, there could be a dividend bump, because they tend to pay out about 70% of cash flow in dividends, and are currently at about 45%. Dividend yield of 3.83%. (Analysts’ price target is $16.36.)

It is caught up in the Canadian energy sell off. He likes royalty companies and they are a great way to participate without having to drill wells. They reduced their dividend. It is not a safe dividend like a utility, but you get the benefit of the rising oil price. The question is how we move our crude to the US.

His model price is $7.31. It is going to lose money this month, and only make $0.17 next year. He would prefer US money centred banks.

An oil/gas royalty company, one of the larger ones in Western Canada. Trading at a discount to its closest comparable, PrairieSky (PSK-T). Dividend yield of 3.43%, and he thinks it could increase next year. (Analysts’ price target is $15.61.)

A company he really likes. They are making good cash flow at $45 oil. Being a royalty company, and not a producer, they have very low capital expenditures, and make money on production that occurs on their land. A relatively conservative way to play oil and gas, with a nice dividend. The dividend is well covered, and could actually be increased. They have a stated payout ratio target of about 60%-80%, and are currently below that, so you could see a reasonably good sized dividend increase in 2017. It is all contingent on oil. 4.5% dividend yield.

Royalties are very sustainable businesses, and is essentially the model that she looks for in free cash flow growth. One of the most sustainable businesses out there today, and believes it will be one of the first to increase its dividend when oil prices start to turn. They have a very, very clean balance sheet. Compared to other royalty comps, they are much cheaper. The spread between this company and Prairie Sky (PSK-T) is as wide as it has ever been. Dividend yield of 4.38%.

FRU-T vs. TOG-T. His preference is FRU-T. You have a solid balance sheet and good sponsorship.

It is running into resistance on a short term basis. You’d like to see this one break out of the recent range before buying it. It broke a nice downtrend at the beginning of this year. It has a significant base. You could buy it at the low end of its band, or when it breaks out above it.

Whitecap Resources (WCP-T) or Freehold Royalties (FRU-T)? When you are thinking between 2 light oil producers like this, there is really a big business model difference. Whitecap is an operator. It owns lands and produces wells and does everything itself. This one is a royalty company, where other players produce on their land and they get a fee for that. It is a little less risky, but Whitecap has a little more upside if oil prices go up.