Valued at a market cap of $222.4 million, Alovopetro Energy (TSXV:ALV) stock is up more than 190% in the last five years. After adjusting for dividends, cumulative returns are closer to 309%. Despite these market-beating gains, the energy stock offers you a tasty dividend yield of over 9% in 2025.
Moreover, it also trades 43% below all-time highs, allowing you to buy the dip and gain exposure to a quality energy stock at a lower multiple.
Let’s see if you should consider owning this high-dividend stock at its current price.
Is the dividend stock a good buy today?
Alvopetro Energy has established itself as Brazil’s first integrated onshore natural gas producer. It continues to deliver exceptional shareholder returns through disciplined capital allocation and strategic positioning in a growing energy market.
The Calgary-based company operates primarily in Brazil’s Reconcavo Basin near Salvador, leveraging the country’s emerging natural gas market, where 32% of the supply is currently imported. Alvopetro’s Q1 production reached 2,446 barrels of oil equivalent per day, with 95% of the output comprising natural gas, demonstrating a focused strategy in this high-demand commodity.
Financial performance remains robust, as Alvopetro generated $9.2 million in funds flow from operations in the March quarter. It also maintained an impressive 80% operating netback margin despite temporary elevated royalties from a regulatory dispute.
The company’s disciplined approach allocates 47% of its funds flow to reinvestment, 48% to stakeholder returns, and 5% to building financial resources.
Growth ahead
Alvopetro’s growth strategy centers on two key assets. The Caburé field, where the company holds a 56.2% working interest, features a unitized development with eight wells and production capacity of 21.2 million cubic feet per day. It also owns 100% of the critical midstream infrastructure, including an 11-kilometre transfer pipeline and a gas processing plant with a capacity of over 18 million cubic feet per day.
The Murucututu project represents significant expansion potential, with 2P (sum of proven and probable) reserves of 4.6 million barrels of oil equivalent and additional contingent and prospective resources totalling 14.7 million barrels of oil equivalent. Recent drilling results from the 183-D4 well showed 61 metres of potential natural gas pay, with completion planned for Q3 of 2025.
Beyond Brazil, Alvopetro has established a Western Canadian growth platform targeting the Mannville Stack heavy oil fairway, where multilateral drilling technology offers attractive economics. It holds a 50% working interest in 8,800 net acres with potential for over 100 drilling locations.
Is the energy stock undervalued?
With a current enterprise value of $208 million and an annualized dividend yield of 9.4%, Alvopetro provides investors with exposure to Brazil’s expanding natural gas market through a proven management team that delivers strong operational execution and shareholder-focused capital allocation.
Analysts expect Alvopetro’s revenue to increase from $65.7 million in 2024 to $126 million in 2029. Compared to this, free cash flow is forecast to grow from $28 million to $71 million during this period.
If the high dividend stock is priced at 10 times forward free cash flow, it should rise by more than 200% over the next four years. After adjusting for dividend reinvestments, cumulative returns could be closer to 250%.
Alovopetro’s annual dividend payout in 2025 is expected to total around $20 million, suggesting that investors can anticipate consistent dividend hikes through 2029. Bay Street remains bullish on the dividend stock and expects it to gain over 25%, given consensus price targets.
