Arc Resources (TSX:ARX) is a Calgary-based oil and gas producer. Shares of Arc Resources have dropped 26% over the past three months as of close on July 16. The stock is down 50% from the prior year.
Oil entered a bear market in early June and suffered another difficult day on July 16. The U.S.-China détente appeared to give the slumping market a breather, but it has failed to generate significant momentum this month. This also means investors have time to add stocks like Arc Resources at a discount.
Shares plunged after the company announced it would retreat from its $775 million 2019 capital expenditure target down to $700 million.
Arc projects capital expenditures between $500 million and $625 million in 2020. Income investors should not be gutted by this news. This pullback demonstrates that the company is committed to low debt and sustainable dividends.
Right now, Arc Resources stock boasts a P/E below 20, and its RSI has rebounded to 45 as of close on July 16. It has climbed back from technically oversold levels, but the stock is still very close to its 52-week low.
Of course, its dividends are the big draw for us today. Arc Resources currently pays out a monthly dividend of $0.05 per share. This represents a hefty 9.1% yield. The payout is tops in its class. Income investors should consider Arc Resources as one of the better value plays in the struggling energy sector today.
