The Toronto Stock Exchange fared better than any of the U.S. indexes in 2022 due primarily to the strength of the energy sector, more specifically fossil fuel companies; these companies may be headed for dinosaur land in the not-too-distant future, but right now they’re what’s keeping many portfolios afloat, asserts Gordon Pape, editor of Internet Wealth Builder.
Calgary-based Tourmaline Oil (Toronto: TOU) is a relatively new, well-managed business that emerged as the country’s top natural gas producer after Encana pulled up stakes and moved to the U.S., changing its name to Ovintiv (OVV) in the process. The company maintains operations in three core areas in Western Canada: Alberta Deep Basin, Peace River area, and the Montney formation.
Third quarter results were impressive. Revenue was up 44% year-over-year to C$1.7 billion. Cash flow was ahead 38% to just over C$1 billion. Net earnings shot up to over C$2 billion (C$6.11 per share) from C$361 million ($1.10 a share) the year before. No wonder the directors were comfortable declaring a special quarterly dividend of C$2 a share.
As of the close on Dec. 16, Tourmaline stock was up 74.2% for the year. But that doesn’t include dividends. Along with its regular quarterly dividend (which was increased to C$0.25 with the December payment) the company paid out four special dividends this year for a total of C$7.90. Investors who owned the stock at the start of the year, when it was trading at C$40.84, ended with a total return of 93%.
Will that continue in 2023? Given the global natural gas shortage, created by Russia’s invasion of Ukraine and the subsequent sanctions, there’s every reason to believe it will. I don’t expect as big a move in Tourmaline’s stock price, but the company is shareholder friendly when it comes to profits so look for more special dividends in the year ahead and a total return in the 40% range.