Vermilion Energy: 5.7% Yield And Monthly Dividend Payments

Oil prices fell off a cliff in 2014, and the shares of many energy companies followed closely. While this might seem like a negative event on the surface, lower stock prices create higher dividend yields – and buying opportunities for opportunistic investors. One energy company trading at an above-average dividend yield is Vermilion Energy (VET). The company’s 5.7% dividend yield makes it a member of the short list of stocks with 5%+ dividend yields.

You can see the full list of 416 stocks with 5%+ dividend yields here.

Better yet, Vermilion Energy actually pays monthly dividends. Monthly dividends are ideal for some investors because they create a more stable income stream for those looking to generate portfolio income. You can see the full list of all 29 stocks that pay monthly dividends here.

Vermilion Energy’s high dividend yield and monthly dividend payments make it stand out to dividend investors. This article will analyze the investment prospects of Vermilion Energy in detail.

Business Overview

Vermilion Energy is an international oil and gas production company with a global operational footprint. Founded in 1994, Vermilion Energy is headquartered in Calgary, Alberta, Canada and has a market capitalization of $4.1 billion. More details about Vermilion Energy’s business model can be seen below.

Source: Vermilion Energy June 2017 Investor Presentation, slide 4

Since the company’s founding in 1994, Vermilion has experienced a truly exceptional rate of growth. The company executed its initial public offering in April 1994 with an opening stock price of $0.30 per share. Currently, Vermilion is trading at a stock price of ~$33, which means that investors that have held since the IPO are holding a 100-bagger with a 5%+ dividend yield. The company has reinvented itself a few times since its corporate inception.

In 2003, Vermilion Energy changed its corporate structure to that of a Canadian income trust, then converted back to a corporation in 2010. In 2013, Vermilion Energy was listed on the New York Stock Exchange, giving it exposure to a new group of United States-based investors.

Source: Vermilion Energy June 2017 Investor Presentation, slide 6

The company’s growth since its founding is nothing short of remarkable. With that said, Vermilion Energy still has a strong growth runway. The company is driving growth through an attractive mix of organic expansion and mergers & acquisitions. Vermilion has a deep and diversified project backlog, allowing the company to pursue scale without sacrificing simplicity. Further, the company’s decentralized business allows it to successfully operate in many disjoint geographies. Vermilion’s strategy can be seen in more detail below.

Source: Vermilion Energy June 2017 Investor Presentation, slide 7

The company’s recent performance has been quite strong. Along with a 30.6% annual return since inception, Vermilion delivered 57.1% total returns in the past year after a few years of lagging performance. Despite the past year’s fantastic returns, Vermilion Energy has only delivered total returns of 1.0% per year for the past three years, largely thanks to declining oil prices in 2014.