Finding a great dividend stock that can provide reliable income for decades is a goal of every investor. Discovering a stellar dividend stock that also pays cash every month is even better. Now, if that stock also boasts long-term growth and is priced at a great entry point right now, then it’s a no-brainer.
And that’s just the tip of the iceberg of why investors should take a look at Whitecap Resources (TSX: WCP).
Meet Whitecap
For those investors who are not familiar with Whitecap, the Calgary-based oil and natural gas operation that has operations in Saskatchewan, Alberta, and British Columbia. The company boasts a light-oil base, which provides ample room for both growth and cash generation.
Speaking of growth, Whitecap is positioned to inject up to $2 billion in capital in 2024. The company believes that investment will bolster production to an average nearing 168,000 BOE/D (barrels of oil equivalent per day). In the long term, Whitecap is forecasting production to rise to 200,000 BOE/D by 2027.
That expected growth comes with an opportunity for investors. As of the time of writing, Whitecap trades down over 10% in the trailing 12-month period.
Much of that drop can be attributed to the overall market volatility we’ve seen for most of 2023. Fortunately, that volatility has pushed this stellar stock that pays cash every month well into discount territory.
Another key point to note is that Whitecap has shed $900 million in debt over the past year. As of the most recent quarter, Whitecap has a net debt of $1.3 billion. Whitecap is also planning to return 75% of free funds flow to investors, both through its dividend and share repurchases.
Whitecap pays a monthly dividend
One of the main reasons why investors will want to consider investing in Whitecap is for its dividend. As of the time of writing, the company offers a monthly dividend which carries an insane yield of 7.57%.
To put the earnings potential of that juicy dividend which pays cash every month, let’s consider an investment of $40,000. In return for that initial investment (always as part of a well-diversified portfolio), investors can expect a monthly dividend of just over $250.
Thant handily makes Whitecap one of the best income-producing stocks on the market, even among those that payout monthly.
Even better, keep in mind that investors who are not ready to draw on that income yet can choose to reinvest it, allowing it (and your eventual income) to grow.
Will you buy the stock that pays cash every month?
No stock is without some risk, and that includes Whitecap. This is why the importance of diversifying cannot be understated. Still, Whitecap’s growing business, tasty dividend and commitment to reducing its debt are tough to ignore.
In my opinion, Whitecap is a great option to include as part of a larger, well-diversified portfolio.
