It’s been a tough couple of years for energy investors. Not only have most energy companies lost a huge amount of value, but dozens have slashed their formerly consistent dividends to nothing.
But there are a few energy companies that are still paying decent yields.
Pembina Pipeline Corp (TSX:PPL)(NYSE:PBA) is one. In fact, the Alberta-based pipeline has actually raised its payout in both 2015 and 2016.
The company is expanding heavily, with plans to spend approximately $5 billion on growth projects by the end of 2017, which will generate as much as $950 million in additional annual EBITDA.
It has dealt with oil’s decline well, moving from contracts that were commodity price based to fee-for-service deals. Approximately 80% of EBITDA comes from flat fees.
Pembina pays a 4.8% dividend which is sustained by the fee-for-service EBITDA alone. And it has plenty of liquidity available to cover its growth projects.
One energy producer that has maintained its generous 4.6% dividend throughout this whole bear market has been Vermillion Energy Inc. (TSX:VET)(NYSE:VET).
Vermillion’s management team has insisted on only investing in high netback production around the world with low decline rates. It has low debt and has managed to grow its production even as oil has declined.
In 2015 the company posted $4.71 per share in funds from operations, with that amount projected to fall to $4.33 in 2016. But that’s still easily enough to cover the $2.58-per-share annual dividend. And if oil goes back up, so will earnings. Vermillion investors may even be looking at a dividend increase soon.
