Dividends can mean a lot to investors, especially when we consider small- and mid-cap oil stocks. These stocks can carry greater risk than their bigger, fully-integrated brothers, but also carry greater potential for dividend growth. Plus, a steady stream of income from dividends is a good way of offsetting the volatility risk factor associated with smaller exploration and production companies.
In that regard, Canadian oil stocks look quite attractive when it comes to paying dividends. Let us have a look at five companies which look pretty impressive right now:
1. Penn West Energy
However, this kind of payment may not last long, as the company registered a negative free cash flow of $334.9 million in 2010. In other words, this kind of return may be affected in the future as cash balances decrease. Still, with a sound business model in place, forward dividend yield should not fall below 2%.
3. Cenovus Energy
5. Talisman Energy
The Foolish bottom line
Canadian oil-stocks look good in terms of payment of dividends. In the long run, I can only imagine profits going up for these companies, as they will definitely cash in from a rise in production in the country with world's third-largest proven oil reserves. According to the Energy Information Administration, production is forecasted to go beyond six million barrels a day by 2035. Also, unlike its Middle Eastern counterparts, Canada need not worry about instability in its markets due to political issues. Still, I believe that it would be prudent to diversify one's portfolio, as company management is capable of playing around with dividends according to their whims and fancies.
The financial data in this article is from Capital IQ, a division of Standard and Poor's.
Isac Simon does not own shares of any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.