Suncor Q2 earnings

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Hey guys what do we think about Suncors Q2?

To me it seems like the company as expected was able to regain some profitability.

Considering the dividend right now is approximately 3.2% could we expect a dividend increase to pre-covid levels in the next year or so?

If that is the case then we are likely looking at a 6% dividend stock which would be huge!

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Asked on July 29, 2021 9:23 am
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Private answer

Hey there.

Suncor has stated that it does want to raise the dividend back to pre-covid levels over the next 2-3 years. The dividend cut is very likely what is causing Suncor to severely lack its peers (Canadian Natural and Imperial Oil) in terms of overall recovery.

Over the last year we've witnessed companies like Canadian Natural and Imperial gain 78% and 61% respectively, while Suncor has gained only 23%.

This is a prime example of how something like a dividend cut can cause the market to re-evaluate the multiple it is willing to give a company.

Is this the cheapest of the major producers right now? Certainly. But if I were to buy one of them for the long term, I'd stick with the industry leader, and the one that was raising its dividend in the midst of a global pandemic and oil catastrophe, and that's Canadian Natural. Suncor does have the potential to outperform IMO and CNQ over the short term just because of its depressed share price, but I view it as the worst producer of the 3 majors to hold for the long term, which is always my mentality.

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Posted by Dan Kent
Answered on July 29, 2021 10:48 am