Fool Canada’s first 1,000%+ winner?

Our Chief Investment Advisor, Iain Butler, and a team of The Motley Fool’s most talented investors from across the globe recently embarked on an unprecedented mission:

To identify the 20 Canadian small-cap companies they believe have the best shot at earning investors like you gains of 1,000%+ over the coming years.

For the next few days only, you can get the names and full details on these 20 potential “10-baggers” when you join Iain and his team in a first-of-its-kind project they have dubbed Discovery Canada 2017.

Crescent Point Energy Corp.: How Solid Is the 6.5% Dividend?

Crescent Point Energy Corp. (TSX:CPG)(NYSE:CPG) still pays one of the best dividends in the oil patch, and investors want to know if the reduced payout is sustainable.

The unthinkable cut

Crescent Point defied the market for as long as it could, but reality finally hit home in August and management had to give in and reduce the long-standing monthly distribution from $0.23 per share to $0.10 per share.

It was a bitter day for Crescent Point’s die-hard fans who thought the company could pull off another miracle like it did during the Great Recession and ride out the rout without trimming the dividend. For most analysts, the writing had been on the wall for quite some time, and any further delay would have been financially irresponsible.

Now, investors want to know if they can rely on the new monthly payment.

Cash flow

Crescent Point reported Q3 funds flow from operations of $484 million. The company spent $321 million on capital expenditures, so cash flow was adequate to cover the costs of keeping the oil flowing and even left $163 million available for dividends. Unfortunately, Crescent Point paid about $218 million in dividends during the quarter, so cash flow actually came up short.

With 500 million shares outstanding, the new payout will cost about $150 million per quarter. If cash flow and capital expenditures continue at the same pace as Q3, funds from operations should be able to cover the reduced distribution.


Crescent point delivered record production of 172,579 barrel of oil equivalent per day (boe/d) during the third quarter. The company made two acquisitions in recent months, and those assets helped boost output by about 4% per share when compared with Q3 2014.

Balance sheet

Crescent Point finished Q3 with $4.4 billion in long-term debt, up 70% from the same period last year.

As of September 30, the company had $1.4 billion in unused borrowing capacity available out of its total facilities of $3.6 billion.

Crescent Point is still compliant with all of its debt covenants. At the end of Q3 the company’s senior debt-to-capital ratio was 0.31. Crescent Point has to keep it below 0.55. The senior-debt-to-EBITDA and total-debt-to-EBITDA ratios are also well within the allowable limits.

Should you buy Crescent Point?

The dividend looks safe for the near term. Crescent Point has 53% of remaining 2015 production hedged at $88/bbl and 33% of 2016 production hedged at $83/bbl. The company says it can meet its cash flow needs with WTI at US$40/bbl or better.

If you believe oil has bottomed, Crescent Point looks like an attractive pick, but that’s a gutsy call to make right now.

Buy this energy stock instead!

Our analysts have identified One Top Dividend-Growth Stock in the energy patch that wins in almost any price environment and you can download the name, ticker symbol, and price guidance absolutely FREE.

Simply click here to receive your Special FREE Report, "1 Top Energy Stock to Buy Today."

Fool contributor Andrew Walker has no position in any stocks mentioned.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to find out how you can claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.