Month-to-month Dividend Inventory In Focus: Paramount Sources – Certain Dividend

Printed on April tenth, 2025 by Felix Martinez

Paramount Sources (PRMRF) has two interesting funding traits:

#1: It’s providing an above common dividend yield of three.8%, which is greater than twice the dividend yield of the S&P 500.#2: It pays dividends month-to-month as a substitute of quarterly.

You’ll be able to obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter, like dividend yield and payout ratio) by clicking on the hyperlink beneath:

The mix of an above-average dividend yield and a month-to-month dividend renders Paramount Sources interesting to particular person traders.

However there’s extra to the corporate than simply these components. Preserve studying this text to study extra about Paramount Sources.

Enterprise Overview

Paramount Sources explores for and produces oil and pure gasoline from typical and unconventional fields within the Western Canadian Sedimentary Basin.

The corporate holds pursuits within the Karr and Wapiti Montney properties, which cowl an space of 185,000 web acres south of Grande Prairie, Alberta. It was based in 1976 and is predicated in Calgary, Canada.

Paramount Sources has a mean manufacturing fee of about 100,000 barrels per day and complete proved reserves of 415 million barrels of oil equal, with oil and gasoline at a 49/51 ratio.

Supply: Investor Presentation

Additionally it is essential to notice that 46% of the corporate is owned by insiders. It is a remarkably excessive share of possession, which ends up in the alignment of pursuits between insiders and the opposite particular person shareholders.

As an oil and gasoline producer, Paramount Sources is very cyclical because of the dramatic swings in oil and gasoline costs. The corporate has reported losses in 5 of the final ten years and resumed its dividend funds solely in the summertime of 2021, after 22 years with no dividend cost.

Then again, Paramount Sources has some benefits over well-known oil and gasoline producers. Most oil and gasoline producers have been struggling to replenish their reserves because of the pure decline of their producing wells.

Paramount Sources reported sturdy 2024 outcomes, with a document manufacturing of 98,490 Boe/d and $815 million in money from operations. The corporate bought its Karr, Wapiti, and Zama property to Ovintiv for $3.3 billion and issued a $15.00 per share particular distribution. It additionally repurchased 5.7 million shares for $177 million and targeted capital spending on Duvernay developments, drilling 58 wells and advancing the Alhambra Plant.

At year-end, Paramount held $188 million in web debt and $564 million in funding securities. Since 2021, it has returned $2.97 billion to shareholders and maintains sturdy liquidity with $830 million in money and investments, plus a $500 million undrawn credit score facility. Fox Drilling continues working six rigs, supporting inside and third-party initiatives.

Excluding bought property, reserves totaled 242.5 MMBoe (50% liquids) with an NPV10 of $2.46 billion. For 2025, Paramount plans $760–$790 million in capital spending, focusing on 37,500–42,500 Boe/d common manufacturing. Volumes rebounded in This fall because the Alhambra Plant got here on-line.

Development Prospects

The corporate has ample room for manufacturing development due to accelerating its improvement efforts in its producing areas.

Supply: Investor Presentation

Paramount Sources has a confirmed document of figuring out key useful resource areas with a low decline fee and greater than 15 years of manufacturing.

Then again, as an oil and gasoline producer, Paramount Sources is very delicate to grease and gasoline value cycles. That is clearly mirrored within the firm’s efficiency document, which has posted materials losses in 5 of the final ten years.

The value of oil has slumped considerably from its peak in 2022. In consequence, the corporate is prone to publish a lot decrease earnings per share this 12 months.

Given Paramount Sources’ promising manufacturing development prospects and the extremely cyclical nature of the oil and gasoline trade, we count on Paramount Sources’ earnings per share to develop by about 1.0% per 12 months on common over the following 5 years, from an estimate of $0.89 this 12 months to $1.73 in 2027.

Dividend & Valuation Evaluation

Paramount Sources is at the moment providing an above-average dividend yield of three.8% , which is greater than double the 1.5% yield of the S&P 500. The inventory is thus an fascinating candidate for income-oriented traders, however they need to bear in mind that the dividend is way from secure because of the dramatic cycles of oil and gasoline costs. Paramount Sources has an honest payout ratio of 55%.

Nonetheless, it’s important to notice that Paramount Sources reinstated its dividend solely in mid-2021, after 22 years with no dividend cost.

The corporate failed to supply a dividend within the previous years, because it incurred materials losses in lots of these years. Due to this fact, the corporate’s dividend is way from secure.

Concerning valuation, Paramount Sources is at the moment buying and selling for 8 instances its anticipated earnings per share of $0.89 this 12 months.

Given the corporate’s excessive cyclicality, we assume a good price-to-earnings ratio of 12.5, which is a typical mid-cycle valuation stage for oil and gasoline producers.

Contemplating the 1.0% annual development of earnings per share, the three.8% present dividend yield, and a 6% annualized tailwind of valuation stage, Paramount Sources may provide a ~10% common annual complete return over the following 5 years.

The anticipated return indicators that the inventory might be engaging in the long run, as now we have handed the height of the oil and gasoline trade’s cycle. Due to this fact, traders ought to look ahead to a decrease entry level.

Ultimate Ideas

Because of the above-average oil and gasoline costs, Paramount Sources has thrived since early 2022. The inventory affords an above-average dividend yield of three.8% and a payout ratio of 55%, which is prone to entice some income-oriented traders.

Nonetheless, the corporate has proved extremely weak to grease and gasoline value cycles. As the value of oil has peaked and will have a cloth draw back, the inventory is dangerous proper now.

Furthermore, Paramount Sources has a below-average buying and selling quantity. Which means that it could be tough to ascertain or promote a big place on this inventory.

Further Studying

Don’t miss the assets beneath for extra month-to-month dividend inventory investing analysis.

And see the assets beneath for extra compelling funding concepts for dividend development shares and/or high-yield funding securities.