Crescent Point Energy has an attractive yield which could get sweeter.

Jul 5th, 2010 – 1 Comment

CPG intends on spending $750M in 2010 and drill 331 net wells. For the time being I would say that your dividend which is currently yielding 7.5% is safe. The price of the shares is another matter.


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Everybody loves this stock. Do you like it? Is the divided safe?

Ted

Stouffville, Ontario

 

 

Hi Ted,

You have asked the most important question when it comes down to a trust, is the dividend safe? If you search the dividend history for Crescent Point Energy Corp.( CPG TSX) going back to 2003 you will find that payouts have been steady with an upside bias. The current dividend payout ratio is 71% leaving the company with enough cash flow to fund acquisitions and drilling to expand its reserves. CPG intends on spending $750M in 2010 and drill 331 net wells. For the time being I would say that your dividend which is currently yielding 7.5% is safe. The price of the shares is another matter.

CPG

The three year chart provides a view of a stock that started to flatten out in late 2009, spiked higher in May of 2010  to $43.00 and then slipped below its 50 and 200 day moving average later in the month.

 

 

 

CPG2

The six month chart clearly illustrates a double top forming  with the MACD generating a sell signal as CPG could only muster a lower high. Support at $38.00 was breached in late June and the stock is looking to test support at $36.00. The 50 day moving average is bending lower and is trending towards a cross below the 200 day moving average. Its not there yet but unless CPG can muster some strength it will put another caution flag on the track.

The uptrend for the stock was broken in December of 2009 and since May of this year CPG has been selling off. The great thing about a high dividend stock is that as the price retreats the yield gets more attractive.

I would put CPG on my watch list for a reversal of the selling pressure and an opportunity to grab an attractive yield. Watch for support at $36.00 . If that doesn’t hold the next level of support comes in at $34.00. But clearly confirm the bottom before you buy.

Happy Capitalism!

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