When Canada’s largest energy outfit reports its first-quarter earnings Monday evening, investors will be watching closely for dividend news.© Todd Korol/Reuters
Suncor Energy Inc. has investors begging for more.
Canada's largest energy outfit reports its first-quarter earnings Monday evening, and analysts expect the company to jack up its dividend to appease investors who are clamouring for the company to put cash in their pockets.
The oil sands powerhouse has shied away from growth for the sake of growth, which means it has money to direct elsewhere. Analysts expect a dividend hike – or lack thereof – to define its first-quarter results. Suncor currently pays investors 13 cents per share each quarter. It last raised the dividend in June 2012.
"Management is very aware that investors want a 50-per-cent [or more] increase in the dividend," Phil Skolnick, an analyst for Canaccord Genuity, wrote in a note last week.
"Management is aware that the market is growing impatient with it," he said.
The question, he said, is whether the desired 50-per-cent jump will happen all at once, or in two instalments. Should Suncor fail to move Monday, he expects the share price to react negatively.
Greg Pardy, an analyst at RBC Capital Markets, calculates the company will rake in $3.8-billion in profit, or $2.50 per share, in 2013, including about $1-billion from selling Western Canadian conventional natural gas assets.
He believes Suncor will increase its dividend to 16 cents on Monday, a 23-per-cent jump from current levels. Suncor could also use its cash flow to reduce debt or purchase additional shares beyond those called for in its current $1-billion plan, he said in a note.
Mr. Pardy labelled Suncor as one of his favourite stocks this quarter, along with competitors Cenovus Energy Inc., Talisman Energy Inc. and Enerplus Corp.
Cenovus posted a profit of $171-million in the first quarter, while Talisman reports Wednesday and Enerplus hands over results next week.
Investors will pay close attention to Talisman's first quarter as Hal Kvisle, its chief executive, continues to shape the company to his liking. Talisman is expected to release more details on asset sales and hedging plans.