May 25, 2022

SRV-U SIR Royalty Income Fund



The SIR Royalty Income Fund (SRV) is basically a corporation that owns several restaurant banners across Canada.  Their most well-known brand is Jack Astor’s Bar and Grill (31 locations).  They also operate eight locations under that Canyon Creek Chop House brand, and four under the name of Alice Fazooli’s.  Finally, the fund owns the following restaurants in downtown Toronto: Far Niente, Loose Moose Tap & Grill, FOUR, and Petit Four.  The fund takes royalties from the revenues of each of these restaurant locations and redistributes the money monthly to unitholders.


The SIR Royalty Income Fund (SRV) had a great 2011 relative to a lean 2010.  Their net earnings for the year were $5.5 million, and this is an obvious improvement over the $15 million loss the company took in 2010.  Also of note is the fact that SIR has purchased four additional sites for five new restaurants set to open in the next couple of years.  Peter Fowler, the President and CEO of SIR Corporation stated, “Our positive results for the year reflect a modest increase in overall same store sales of 2.8% over 2010.  We completed renovations at a number of our Jack Astor’s restaurants in conjunction with our commitment to maximizing performance at our locations.  Overall, we are committed to appropriately managing costs while at the same time sustaining and growing restaurant sales.  We continue to monitor the factors affecting our industry including economic conditions and consumer confidence in an effort to deliver positive and reliable results for Unitholders.”  Management at SIR claims that in addition to buying into their new locations, they are committed to investing in their existing restaurants, “To ensure that it remains well positioned with modern and relevant concepts.”


I wouldn’t recommend such a small restaurant play for anyone looking for a stable dividend supplier.  The food service industry is so competitive that profit margins will always be kept minimal.  While Mr. Fowler is right in that current economic conditions are not conducive to great business in slightly upscale restaurants, I would argue that it rarely is.  I’m not sure I see what competitive advantage SIR (SRV) offers, and their lack of geographical diversity is concerning to me as well.  With such a small market capitalization (not quite $60 million), the stock could fluctuate quite a bit going forward.  We have seen this worry bear out over the past 52-week period as the stock has went from a low of $7.16, to a high of $11.25.  It is now trading close to those highs.  This has resulted in a Beta of 0.559.  All of that being said, if you don’t mind a little risk in your dividend portfolio, the current annual dividend of $1.00 does offer unitholders an enticing dividend yield of 9.10%.  I just simply believe that there are more stable and consistent places to park your capital.


SRV-U SIR Royalty Income Fund Dividend Stock Graph:



SRV-U SIR Royalty Income Fund Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
SRV-USIR Royalty Income Fund10.899.15100.13Retail-Restaurants01.362369-6.956518

SPS/A Sportscene Group Inc



Sportscene Group Inc. (SPS) is a niche chain of themed sports bars.  They are operating exclusively in Quebec and began in 1984.  The chain officially goes by the brand name of La Cage aux Sports.  At last count, there were 52 locations of La Cage aux Sports.  Sportscene Group wholly or jointly owned 38 of these locations, while the remaining 14 were franchisee-ran.  The restaurant/sports bar’s motto is, “Sports, Gang, Fun.”  They have embraced the modern sports bar image and emphasize big screen televisions and special events in order to attract to patrons.  In order to supplement their usual offerings, La Cage aux Sports has begun to put on big name events including professional boxing matches and other athletic endeavors.  There are three main divisions within the Sportscene Group (SPS).  The first is the core business – the restaurant and sports bar business which generates over three quarters of the company’s overall revenues.  The second segment includes the operation and management of the real estate properties that the company controls.  Finally, the third main division within SPS revolves around the revenues generated by staging complementary activities (usually sports related).


During the 2011 fiscal year, the Sportscene Group reported that they have continued to face headwinds in their fight for Quebecer’s leisure spending.  The year seen the renovation of several La Cage aux Sports locations, the opening of a new corporate location, and a new Franchisee addition as well.  These new additions to the Sportscene (SPS) portfolio led the company to experience a 4.1% overall rise in revenues despite a 2.2% decline in network sales.  Total sales numbered just under $108 million for the year, and earnings of $3.9 million.  Jean Bedard, the President and CEO of the company recently stated, “Sportscene Group’s financial performance over the past few years attests to its ability to adapt to new spending trends and to evolve in a challenging business context in a disciplined, proactive and profitable manner. We are determined to meet the challenges and opportunities that will arise in the coming quarters with the same openness and creativity, in order to maximize benefits for our organization and shareholders,”


In 2012 the Sportscene Group (SPS) looks to focus on three primary objectives.  The first is to grow through external expansion.  Two new La Cage aux Sports locations are planned for 2012 and another corporate Cage is in the works as well.  The company will also look to expand is partnerships and interests in complementary activities, especially though InterBox and its sports complex.  Secondly, to grow same store sales growth as profit margins expand for the restaurant chain.  This growth will be driven by new menu additions and capitalizing on its unique advantage in terms of hosting sporting events.  Finally, the Sportscene Group (SPS) hopes to continue refining its best practices in a bid to raise overall efficiency and profitability.


Shares of the Sportscene Group recently close around $8.80.  This is down significantly from the 52-week high of $12.50, and close to the low of $8.05.  The company is very small and has a market capitalization of $36.68 million.  It’s annual dividend of $0.60 gives the share a dividend yield of 6.8%.  I don’t like the overall investing climate of Quebec right now.  Its market prospects don’t look good, and I don’t like the idea of investing in such a geographically concentrated business.  Especially when that geographic location is going through tough economic times and the business relies on leisure spending; therefore, I would definitely recommend not buying this stock at the current time.


 SPS/A Sportscene Group Inc Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
SPS/ASportscene Group Inc11.755.1159.37Retail-Restaurants0.18319113.713730

SPB Superior Plus Corp


Superior Plus Corporation (SPB) is a company that spans three main divisions.  Their main focus is maintaining the stability of their divided, and even though recent times have been a little rough on the stock, it still generates a considerable dividend yield.  The Energy Services segment of the company is involved in the distributions and wholesale procurement of propane and other heating fuels across Canada and parts of the USA.  The division also possesses some natural gas assets in British Columbia, Quebec and Ontario.  The Speciality Chemicals division focuses on the production of sodium chlorate and other chemicals used to make pulp and paper finished products.  They also do business in the fields of chloralkali and potassium-based products.  Finally, the third main division of Superior Plus is the Construction Products division.  They are a wholesale supplier of walls, insulation, and ceilings to the North American construction industry.


The last couple of years have been difficult ones for the company.  In 2011 warmer-than-average temperatures across North America negatively affected the energy supply division, and was a serious drag on overall profits.  After trading around the $14 dollar mark early in the year, the stock slid as far as $5.50 (it has since recovered considerably from these lows).  The negative stimulus that preceded this downfall was the slashing of the all-important divided.  A balance sheet that had too much in the debt column was the chief culprit for this refocused strategy.  Last year’s CEO Wayne Bingham reported, “We are intently focused on our debt and debt management and our capital structure,” he went onto say, “There is no plan to reduce the dividend, we are extremely comfortable with the 50% payout ratio.”  After these reassurances, the stock has now rebounded somewhat.  Superior Plus (SPB) recently named a new CEO and President.  On November 14, 2011 Luc Desjardins replaced Mr. Bingham and is set to take the reins going forward.


While Superior Plus clearly has some fundamental issues with its balance sheet, it just might be the stereotypical case of investors overreacting to a dividend cut at play.  The stock might offer substantial value at the current rate if you believe in the new management, and the general efficiency of the company.  The debt pay down has went as planned, and the company is now leveraged considerably less than before, even if the payout ratio to shareholders did suffer as a result.  The company would stand to benefit from higher natural gas prices, as well as a renewed interest in the American construction industry.  As long as those aspects of the economy stay well below their historical norms, it will be difficult for Superior Plus (SPB) to see much capital growth.


The stock most recently opened at $7.57.  Superior Plus has a fairly large market capitalization of around $825 million.  Even after it was reduced twice in the past year, the company’s annual dividend is still a solid $0.60.  This gives it a dividend yield of 7.9%.  Dividend investors who don’t mind a bit of risk could be amply rewarded with this stock going forward.


 SPB Superior Plus Corp Dividend Stock Graph:


SPB Superior Plus Corp Trend Analysis:

SPB TrendSPB is trading on a strong uptrend, read the technical analysis here.

SPB Superior Plus Corp Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
SPBSuperior Plus Corp11.7510.21#VALUE!Retail-Propane Distrib0.997642-8.296323-4.320991


SCU Second Cup Ltd



At first glance there appears to be few companies that possess a better business model than coffee houses.  Running water over coffee beans you buy by the ton in order to produce a final product that must have a ridiculously high profit margin.  Then you pair that up with other novelty products such as high-priced baking and seasonal offerings, and you have a very profitable enterprise indeed.  While Starbucks is likely the brand name that you most associate with the coffee house industry, its brethren Second Cup (SCU) is another profitable dividend-payer.  The newly formed corporation came about as a restructuring of the company’s income trust model on January 1st, 2011.


Second Cup began in 1975 as a kiosk in a shopping mall, and it only sold coffee beans, as opposed to the full-fledged brewing locations we see today.  The company is now that largest franchisor of speciality coffees in Canada with 350 cafes in all.  Interestingly, 95% of Second cup Locations are franchisee-owned.  The franchise model is particularly attractive as owners of each location have a strong inventive to pursue new and innovative ideas in order to gain a competitive advantage over other coffee houses in their respective areas.


Second Cup (SCU) is proud of the fact that it buys only fair trade coffee.  The company is fully committed to the Rainforest Alliance Certification, Fair Trade, and Organic causes.  Siting corporate responsibility in its treatment of their employees and partners around the globe, Second Cup sells over one hundred thousand high-quality beverages every week.


Second Cup’s (SCU) annual results for 2011 were recently released.  While not spectacular, the company’s sales remained solid.  The President and CEO of Second Cup, Stacey Mowbray announced, “Given the continued intense competition in our category, the growth in same café sales of 1.2% in the fourth quarter and 1.8% system sales growth for the year was a satisfactory result. I am pleased with the opening of 22 new cafés during the year, giving us net growth of 10 cafés to the system. Earlier this year I announced that 80% of our Second Cup coffees and 100% of our espresso beverages have been Rainforest Alliance certified. We are proud of our continued leadership and commitment to sustainability through third party certifications. With our recent innovation in our tea offerings, I am proud to report that all of our teas and tisanes have also received Rainforest Alliance certification. This commitment to quality and sustainability in our beverage products coupled with the commitment and passion of our franchise partners supports Second Cup’s unique position in the market as The Coffee Company that Cares.”  While Ms. Mowbray may attempt to put a positive spin on the situation, revenues were down slightly overall on a year-over-year basis.


Second Cup (SCU) recently saw its stock open at $7.38.  This is close to the 52-week high of $7.99 and definitely a premium relative to the 52-week low of $5.44.  The company also has a relatively small market cap of around $74 million.  This makes me slightly nervous even though the company’s annual dividend of $0.60 gives it a tempting dividend yield of 8.2%.  I prefer larger industries, and companies with a more natural competitive advantage for my dividend portfolio.



 SCU Second Cup Ltd Dividend Stock Graph:


SCU Second Cup Ltd Trend Analysis:

SCU TrendSCU is sending contradicting signal, better check the complete technical analysis to learn more about it.

SCU Second Cup Ltd Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
SCUSecond Cup Ltd/The7.458.0582.21Retail-Restaurants0.1743175-3.428212-8.69636

PZA-U Pizza Pizza Royalty Income Fund



One of the industry hold overs from the old income fund model is the UPizza Pizza Royalty Income Fund (PZA).  Most of these income funds in a variety of sectors changed to a more traditional corporate structure when the tax rules regarding income trusts changed in January of 2011.  Pizza Pizza is a Canada-wide pizza and pasta chain that is based out of Ontario. It has been in operation since 1967 and calls itself “Canada’s 1 pizza company.”  It is focused on becoming more geographically diversified, and maintaining its status as a leader in innovation.


Pizza Pizza (PZA) runs under a franchisee business model where each location pays a certain percentage of profits into the royalty pool that then gets paid out to unitholders.  Pizza Pizza offers potential owners of franchises such advantages as: centralized warehouses to promote volume purchasing, specialized operator training at the Pizza Pizza training centre, centralized financing options, real estate assistance and lease renewal, and centralized payment of all operating expenses such as sales taxes, mortgages and rents.  This helps take a large burden off of the back of any independent restaurant operator.  Especially form a business management standpoint.  It also gives the franchisee instant brand name recognition, all for a reasonable royalty rate of 6%.


The Pizza Pizza (PZA) brand is just coming out of a rough patch.  In 2010 the fund paid out 106% of its income, thereby depleting cash reserves in order to maintain dividend levels.  In 2011 the royalty fund announced that same store sales growth was up 2.6% and total sales were up 2.7%, due to the fact that there were 695 locations in the Royalty Pool in 2011 compared to 671 in 2010.  “Overall, our market-leading brands performed well in a competitive industry and in an uncertain economy,” Paul Goddard, the CEO of Pizza Pizza Limited stated.  “Going into 2012, I see innovation and customer satisfaction as the keys to accelerating our growth and further separating our brands from the competition. We’ll also continue leveraging our modernized restaurant network and “Hot and Fresh” menu to grow market share.”  Management predicts that the number of restaurants in the UPizza Pizza Royalty Income Fund (PZA) will increase by 2% in 2012.


Shares of the fund recently close at their 52-week high amidst forecasts of brighter times ahead.  The current unit price is $9.42, and this is up from a 52-week low of $7.27.  For a food retail stock, Pizza Pizza offers surprizing stability and has a relatively large market capitalization  of around $205 million.  Their annual dividend of $0.70 rewards unitholders with dividend yield of 7.5%.  If you’re looking for exposure to the Canadian restaurant industry, the piazza giant probably isn’t a bad play.  There are obviously adamant about preserving their dividend, and the stock appears to be reasonably priced.  I tend to stay away from the ultra-competitive business, but if you want to invest in the sector Pizza Pizza (PZA) is worth a look.


 PZA-U Pizza Pizza Royalty Income Fund Dividend Stock Graph:



PZA-U Pizza Pizza Royalty Income Fund Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PZA-UPizza Pizza Royalty Income Fund9.267.57105.57Retail-Restaurants05.000564-8.215052

KEG-U Keg Royalties Income Fund



The Keg (KEG) Steakhouse and Bar is fast becoming one of Canada’s premier food brands.  Many premier dividend investing sites have been recommending the Keg Royalties Income Fund for some time now.  The first location of the now widespread restaurant chain opened in Vancouver, British Columbia in 1971.  The Fund now collects Royalties from over 100 locations across Canada.  On all sales made at Keg (KEG) locations, a 4% royalty gets kicked into the fund and distributed to unitholders.  Like many of the major franchises in Canada these days, the Keg prefers the franchisee model because of the simplicity of the royalty system.  This money essentially becomes pure profit regardless of the operating expenses each location faces.  The Keg (KEG) began operating under this structure on May 31, 2002.  It is one of the faster-growing restaurant chains all over Canada.


The Keg Royalties Income Fund was pleased to announce that in 2011 gross sales increased by 4.3% for the year.  While some of this growth was fueled by the addition of new locations to the royalty pool, same store sales growth was up a solid 3.5% for the year.  Royalty income increased by $808,000 or 4.4%% from $18,422,000 in 2010 to $19,230,000 in 2011.  While the fund was held back in returning all of these increases to unitholders due to the change in the taxation of income trusts in Canada, they still seen enough growth to warrant the interest amongst dividend devotees.  Overall, the Keg Royalties Income Fund (KEG) remains in a great position with over $4 million cash on hand, and working capital balance of nearly $1 million.  David Aisenstat, the President and CEO of Keg Restaurants Ltd. Stated the following about 2011 reports, “The strength of The Keg brand and our continuing focus on providing consistently great guest experiences in our steakhouses and bars have combined to result in exceptionally strong sales for 2011. We are confident that going forward our growth will continue through both new locations and same store sales increases.”


Units of the fund recently closed at $14.55.  This is right up against the 52-week high of $14.86 and up from a low of $11.15 (for a Beta of 0.799).  The Keg Royalties Income Fund (KEG) has a fairly mid-sized (for the sector) market capitalization of  $164 million.  Even as the unit price presses up against a higher and higher valuation, its Price-to-Earnings ratio still remains a very attractive 11.08.  Its annual dividend of $0.96 gives it a yield of 6.6%.  All signs point to that dividend number growing as the royalty pool experiences growth from internal sales escalating, as well as the addition of new locations to the fund.  The Keg looks to have a solid competitive advantage in its market, and has made its name synonymous with the steakhouse concept from coast to coast across Canada.  Opening up a Keg (KEG) location guarantees potential customers a certain high level of food quality, and consequently gives the owner immediate positive exposure and reputation.  If you have a little stomach for risk, this might be an excellent dividend stock to get exposure to.




KEG-U Keg Royalties Income Fund Dividend Stock Graph:


KEG-U Keg Royalties Income Fund Trend Analysis:

KEG TrendKEG is on a strong uptrend. Click here to get a free technical analysis of KEG

KEG-U Keg Royalties Income Fund Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
KEG-UKeg Royalties Income Fund/The13.227.26104.01Retail-Restaurants0.09975981.798583-6.220663

BPF-U Boston Pizza Royalties Income Fund



The Boston Pizza Royalties Income Fund (BPF) is a great play on the retail food industry if you want to diversify your dividend portfolio.  It is self-described as Canada’s number one casual dining brand.  With over 340 restaurants across Canada, and 2010 sales of over $853 million, it is tough to argue with that claim.  The franchise started in Edmonton, Alberta in 1964.  Their business model includes the unique concept of “two experiences under one roof.”  This refers to the common layout of Boston’s locations where a sports bar is often adjacent to a family dining atmosphere.  Boston Piazza (BPF) prides itself on keeping costs low, consistently reinventing itself, continuing their proud tradition of marketing excellence, and increasing their number of locations year over year.


Boston Piazza management just reported same store sales growth to the tune of 4.9% in 2011 over 2010.  This comes on the heels of a tough year for BP that seen a net loss in that department of 1.3% in 2010 from 2009’s numbers.  The extra profits were primarily a result of increased takeout and delivery sales (attributed to the escalation in marketing for Boston’s (BPF) online platform).  The new chicken wing product and promotion was also a large draw during the past year.  Other areas of growth were the seasonal favourites menu, and gift card sales during the holiday season.  Mark Pacinda, the President and CEO of BPI stated, “We are very pleased with the strong same store sales growth of 6.4% in the fourth quarter and 4.9% in 2011. This is a key metric with respect to distribution growth for Boston Pizza Royalties Income Fund and our steady top line growth has enabled the fund to increase monthly distributions to unitholders a total of 14 times since the initial public offering in 2002. In addition, Boston Pizza International opened seven new full service locations in 2011 and posted record annual system-wide sales which exceeded $900 million from 343 locations, further expanding Boston Pizza’s position as Canada’s #1 casual dining brand.”


Boston Piazza management continues to expand their brand as evidenced by opening seven new locations in 2011.  This trend looks to continue in 2012 as plans are in place for several new openings across Canada.   Units of the fund recently opened at $18.09.  This shows a mark of investor confidence as 52-week highs of the Boston Piazza Royalties Income Fund (BPF) are $18.41, and are considerably up from the 52-week lows of $10.30.  The annual dividend of $1.18 gives the find a yield of 6.5%.  While that yield number looks big, I’m not encouraged by Boston’s relatively low profit numbers over the last few years.  There are probably more stable companies out there for your consideration.  If you are willing to bet the company’s brand will sustain them through some lean times, it might end up being a fine purchase, just one I’m not willing to make at this point.


BPF-U Boston Pizza Royalties Income Fund Dividend Stock Graph:



BPF-U Boston Pizza Royalties Income Fund Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
BPF-UBoston Pizza Royalties Income Fund14.087.15735.97Retail-Restaurants0.28424921.313627-6.739128

AW-U A&W Revenue Royalties Income Fund



A&W (AW) was Canada’s first fast-food burger chain in Canada.  It opened at its first location in Winnipeg in June 1956.  The company expanded at record rates and by 1966 it had over 200 drive-in locations.  It quickly became a brand name associated with the baby boomer generation in Canada.  In 1972 the burger chain was purchased wholly by Unilever Canada Limited.  Since this point A&W Canada has actually operated as a completely separate entity from its American cousin.  Since the 1980s, much of A&W’s (AW) expansion has been in shopping centres.  They are market leaders in this category with roughly 220 shopping mall locations.  By 1996 A&W had underwent some corporate changes, and management would now focus on a franchisee structure going forward.  Over the next couple of years, the company would sell over a hundred restaurants as it streamlined operations.  In 2002 the A&W Revenue Royalties Income Fund (AW) was created in order to take advantage of favourable tax policies in Canada.  The company charges a royalty of 3% of sales that get paid back into the fund.  With over 730 restaurants from coast-to-coast, those burger sales add up fast!  A&W has seen 90% growth in the last decade, serves nearly 100 million customers a year, and employs roughly 19,000 people.


A&W (AW) recently released their 2011 financial highlights.  Same store sales were up for the ninth straight year (fast food stocks remained relatively unaffected by the economic downturn).  Royalty income overall was up 2.3% over 2010, and total sales were close to $800 million.  Much of this growth was due to the opening of 15 new locations in 2011.  Paul Gollands, the President and CEO of A&W Food Services of Canada Inc. stated, “We are pleased to report that in 2011 A&W recorded its 9th consecutive year of same store sales growth, even though the fourth quarter saw a slight decrease in same store sales.  Since the launch of the Fund 10 years ago, we have consistently focussed on managing the Fund in a fiscally conservative fashion resulting in increased distributions for unitholders.  To that end we are also pleased that regular monthly distributions per unit were up 10% for the quarter and the year despite the imposition of the SIFT tax. With the foodservice industry continuing to face uncertain economic conditions and a weak foodservice market in British Columbia, we will be launching new tactical and strategic initiatives in 2012 to counter these conditions.  Finally, the opening of our 750th restaurant in January is an important milestone as we continue to pursue our strategy of rapid expansion across the country.”


It is important to note the continued profitability of the fund in 2011 even though tax advantages disappeared in January of that year.  Units of the fund recently closed at $21.79.  This is slightly off of the 52-week high of $22.36 and relative to a low of $18.16.  In terms of the food retail industry, A&W (AW) has a strong market capitalization of $246 million.  With a very reasonable Price-to-Earnings ratio of 10.23, and a dividend yield of 6.4%, the stock looks like a pretty stable dividend-payer going forward.


A&W (AW) Dividend Stock Graph:


A&W (AW) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
AW-UA&W Revenue Royalties Income Fund20.256.93102.38Retail-Restaurants03.669445-11.00543



Penn West Petroleum Ltd (PWT)




Penn West Petroleum Ltd. (PWT) is a Canadian oil company that specializes in the production and exploration of light oil properties in Canada.  They are based in Calgary, Alberta and have established a sizeable stable of holdings that includes over six million acres across western Canada.  They are now one of the largest conventional oil and natural gas companies in North America.  Penn West’s commitment to providing long-term value to shareholders through maximizing the efficiency of operations along with strategic purchases of long-life oil properties, mirrors that of many of their competitors.  They site their diversified portfolio, specialized technical teams, advanced 3-D seismic technology, a strong balance sheet, and experienced management team, among the strengths that set them apart.


Penn West (PWT) has extensive holdings of multiple types of profitable hydrocarbons.  Currently, roughly 53% of total production is allocated to light oil, 10% to heavy oil products, and 37% is natural gas-related.  In each of these key sectors Penn West has some of deepest pools and most profitable “sweet spots’ on record.  These properties are located across the sedimentary basin of western Canada in British Columbia, Alberta, southern Saskatchewan, and southwest Manitoba.  Some of these pools were not recoverable in the past, but due to recent advances in extraction methods, these properties have suddenly become much more valuable.  The waterflood programing technology that has become popular in the field is quickly developing and improving profits on a consistent basis.  Other extraction improvements such as the use of carbon dioxide have also catapulted Penn West (PWT) forward in recent years.  Penn West believes that this focus on improving extraction efficiency is key in their quest to maximize returns to shareholders and they intend to make it a long-term strategic goal.


One of the unique aspects of the Penn West (PWT) model is their emphasis on aboriginal relations.  I believe this could play a major role in their ability to maximize their extraction potential in the future, and it is also advantageous for the country as a whole.  Siting such important areas as relationship building, education opportunities, economic development, employment opportunities, and community participation, Penn West appears to provide more than the standard lip service to this sometimes controversial issue.


Penn West (PWT) has more than 2,000 employees and is a stable presence on the Canadian energy scene.  The third quarter of 2011 saw a 30% increase in year-over-year revenues from 2010, and reached an overall total of $348 million.  Income from the quarter rose to $138 million.  The stock is currently trading around $21.44.  This is closer to its 52-week high of $28.20 than its low of $13.22.  Even at this relatively high price, it still has a reasonable Price-to-Earnings ratio of 14.48.  The large market cap (almost 10 billion) and annual dividend of $1.08 (5% dividend ratio) make Penn West a legitimate competitor for your energy investment dollar on the crowded TSX.  I believe there might be slightly better-valued companies out there at the moment, but there is little doubt that PWT is a solid company and will remain highly profitable for the foreseeable future.


Penn West (PWT) Technical Analysis:

PWT trend analysis

PWT is trading on a up trendGet your Free PWT trend analysis report.

Penn West (PWT) Stock Graph:


Penn West (PWT) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PWTPenn West Petroleum Ltd25.144.3303.540.2510306-17.91227-31.66667

Trilogy Energy Corp (TET)



Trilogy Energy Corporation (TET) is an mid-sized Canadian energy company that was brought into existence as a spinoff of Paramount Resources in the spring of 2005.  It operated under the structure of an energy trust until 2010 (which seen most of Canada’s energy trust switch over to alternate business models due to new tax regulations).  The company is focused on developing assets in the Kaybob area.  This allows Trilogy to keep a tight control on costs and associated risk.  While the energy company’s goal under the energy trust model was to maintain a certain level of production and pass earnings on to shareholders, Trilogy (TET) has developed more of a growth model after their re-structuring in 2010.  They have also been on the cutting edge of technology in the energy field and have made great use of horizontal drilling and completion techniques, which have allowed the company to exploit smaller reservoirs and further cut costs.  Since 2012 management has seen fit to reinvest more of the company’s earnings into growing and developing a larger asset base.


Over 93% of Trology’s production came from their Kaybob property last year.  It also accounted for 88% of the capital expenditures, and has been identified as the main production focus of 2011 as well.  Trilogy (TET) has found that this area represents the most efficient and profitable drilling opportunities for the company going forward, and that it has a large quantity of high quality gas assets.  Since the company has already sunk the majority of the infrastructure costs into the area, management believes that the most profitable years are still ahead in terms of profit margin.  In 2010 the Kaybob property produced over 21,200 boe/d, which was a large increase from the 17,837boe/d that were produced in 2009.  Thus proving that the capital expenditures and investment in technology are paying immediate dividends, especially when it came to using horizontal wells.  It is definitely worthy for potential investors of Trilogy Energy (TET) to note that board chairman Clay Riddell recently purchased an additional 100,000 shares of the company.  While these stock options were realized at a huge discount relative to the market premium, it still represents a substantial vote of confidence for the company.


Trilogy is recent trading in the $36.00 range.  This is after an explosion in stock value during 2011 from a 52-week low of $11.65.  It has a market capitalization of $4,269 million.  I’m not quite sure where the confidence has come from for investors to boost the price of this company so high.  While the energy sector is notoriously volatile, a 300% jump in share price is definitely considerable.  With a very high Price-to-Earnings ratio of over 30, I’m not rushing out to buy the stock at current prices.  The company’s annual dividend of $0.42, gives the company a yield of merely 1.10%.  This just isn’t competitive with the other companies in the energy sector.


Trilogy Energy (TET) Technical Analysis:

TET trend analysis

TET is trading on a strong uptrend, CLICK HERE to get your free trend analysis report on TET.

Trilogy Energy (TET) Stock Graph:


Trilogy Energy (TET) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
TETTrilogy Energy Corp21.781.93528.160.1966435-33.33595-24.32433