What You Need to Know About Crescent Point Energy Corp.’s Dividend

Although Crescent Point Energy Corp. (TSX:CPG)(NYSE:CPG) provides investors with a high dividend yield, there are some things you need to know before putting your cash into the stock.

| More on:
The Motley Fool

When dividend-seeking investors look for places to park their money, many turn toward companies like Crescent Point Energy Corp. (TSX: CPG)(NYSE: CPG) that pay a high dividend yield. Crescent Point is one of the largest in the Canadian oil sector and currently pays about a 6.3% yield.

While on the surface it may seem like a no-brainer to invest in it for its high yields, investors should look beneath the surface before investing in this company to avoid a few surprises.

The most important thing investors must understand is that Crescent Point Energy urges its shareholders to take their dividend in shares, as opposed to cold, hard cash. The company sometimes even throws in a 5% incentive to do so. If you are in the category of investors who are (and I use this term very loosely) “cash-sensitive,” then this company may not be the best choice for you.

However, if you can overlook this issue and are a happy camper no matter what form your dividend is paid in, then Crescent Point Energy makes a strong case to attract your investment dollars.

This is a company that has grown tremendously over the years and next year its dividend payout ratio will fall to 105% from 140%, making the current dividend safe. Crescent Point Energy grows not only with the help of acquisitions but, more importantly, by increasing production. It recently purchased conventional oil assets in Saskatchewan and Manitoba, along with undeveloped land from Lightstream Resources Ltd. worth $378 million. These assets produce about 3,300 barrels of oil equivalent per day and about 40 sections of the land base have yet to be explored.

From a bird’s-eye perspective, Crescent Point Energy is a valuable asset to have in your portfolio. But you need to understand exactly what you are getting back in return with those high dividend yield numbers.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »