# Enerplus (ERF)



## DM11 (Jan 13, 2012)

I noticed this stock has a dividend yield of 9.1%.

Why is is so high?
Is this a good stock to buy? 

I must be missing something, with a yield this high it seems to good to be true.


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## stephenheath (Apr 3, 2009)

I think it's because they are both in oil and natural gas, and with natural gas at such lows they got punished... and then they issued new shares at 23.45 so as soon as that was announced the stock dropped down to just below 23.45.


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## DM11 (Jan 13, 2012)

thanks for the reply,

In your opinion do you think its a good buy? I would buy it for the dividend yield but obviously I don't want the stock price to drop.


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## b_foot (Dec 16, 2010)

I don't know about enough about this company to comment. I would pick this up for the dividend unless the dividends are not sustainable. Take a look at the dividend trend and the earning trend.


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## blin10 (Jun 27, 2011)

been getting nice divis for past few years, pick up more few days ago...


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## gibor365 (Apr 1, 2011)

ERF cut their dividends in Mar 2008 and it's steady up to now ... may be they were income trust before?


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## Spidey (May 11, 2009)

Timely topic. I've recently been analyzing both this and Bonavista. Bonavista is more highly recommended but to me the numbers look a little better with Enerplus. Net insider selling on both of them, though.


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## canehdianman (Apr 7, 2009)

I was about to start a new thread on Enerplus and then decided to search in case it had already been discussed (and it had, with the same question I have).

Namely, this stock has a fantastic looking dividend. 9.6% at the moment. 

Looks pretty good, but does make me wonder what I'm not seeing. Usually I would be concerned that the dividend is not sustainable (cough, YLO, cough), but I don't see that problem here.

Thoughts?


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## HaroldCrump (Jun 10, 2009)

The stock price performance is terrible.
Seems like what you gain in distributions, you lose in share price - and then some.
I don't know any details about this company, but is there any reason why the stock price will not keeping falling the way it seems to be.
What is driving the bearish stock price, and where does it end?


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## stephenheath (Apr 3, 2009)

I wish I knew... it was one of the first energy companies I bought back in 2008, and the prices are now right about where they were then. In the intervening time it's often been a recommended buy from Morningstar, and it's generated enough cash for me that I'm in the black, but lately it keeps going down even though natural gas prices have basically bottomed, and now Morningstar has decided it has no moat at all and dropped it from some of their opinion portfolios.


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## blin10 (Jun 27, 2011)

im slowly buying more and more on a way down, let's say they cut divi by 50% it will still be close to 5%....


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## al42 (Mar 5, 2011)

Ya But if they cut Share Price will get hammered. I've seen it all to many times before.


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## blin10 (Jun 27, 2011)

al42 said:


> Ya But if they cut Share Price will get hammered. I've seen it all to many times before.


i've seen many times the opposite, they cut the divi it goes down and recovers the next few days...it's better for the company


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## canehdianman (Apr 7, 2009)

Dividend yield is over 10% now. 

I feel like this stock is like trying to catch a falling knife. That dividend yield is incredible, but if the stock price keeps dropping, eventually the dividend will disappear.


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## Ethan (Aug 8, 2010)

Instead of looking at an increasing dividend yield or a falling share price to evaluate the likelihood of a dividend cut, has anyone considered ERF's cash flows?


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## zylon (Oct 27, 2010)

*press release March 29*

snip:


> At our upcoming annual and special meeting being held on May 11, 2012, Enerplus shareholders of record as of March 23, 2012 will vote to approve the replacement of our current Dividend Reinvestment Plan ("DRIP"), which is available only to Canadian shareholders, with a Stock Dividend Program ("SDP)" that will be available to all shareholders.
> 
> Similar to the DRIP, the proposed SDP will allow all shareholders to receive dividends in the form of shares of Enerplus at a 5% discount to the current market price instead of a cash dividend. Participation in the SDP will be completely optional allowing Enerplus shareholders to continue to receive cash dividends unless they elect to receive stock dividends.
> http://www.theglobeandmail.com/globe-investor/news-sources/?date=20120329&archive=cnw&slug=C8838


Stock quote $19.68 Div yield 10.5%

P&F bearish price objective: $18
http://stockcharts.com/def/servlet/SC.pnf?c=ERF.TO,P&listNum=

Weighting: 44% oil / 56% natgas (approx)


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## zylon (Oct 27, 2010)

*cash flow*



Ethan said:


> Instead of looking at an increasing dividend yield or a falling share price to evaluate the likelihood of a dividend cut, has anyone considered ERF's cash flows?


At $19.68 ERF trades at 5 times forecast
2012 cash flow of $3.90 per share.
(source: March 2012 Cdn Wealth Advisor)


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## Ethan (Aug 8, 2010)

zylon said:


> At $19.68 ERF trades at 5 times forecast
> 2012 cash flow of $3.90 per share.
> (source: March 2012 Cdn Wealth Advisor)


Is that operating cash flows? I'm assuming so.

In looking at their 2011 financial statements, operating cashflows were $3.47/share (using basic, weighted average shares during 2011). So $3.90 seems reasonable for operating cashflows in 2012.

The question then becomes what amount of capital investment is required to maintain the $3.47/share, and growth of $0.43/share. In 2011, capital expenditures were $4.88/share (not including purchases of land). Combined with dividends of $2.16/share, I imagine they'll be running a cash deficit next year. To fund operations ERF will need to either:

- sell assets (they sold $641 million of land last year)
- incur further debt (in 2011 they increased bank debt by $212 million while repaying $45 million of senior notes)
- issue shares (they issued $64 million of shares last year)
- cut the dividend

The outlook isn't rosy for ERF, at least until natural gas prices rebound dramatically. To me, cutting the dividend makes the most sense, but I know that is often a last resort for management. It's tough to say what will happen but I'm avoiding this one for now.


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## jamesbe (May 8, 2010)

Wow I moved half my position in this over to Acq a few months ago to stop the bleeding, I'm thinking I may just cut my losses and move the rest, I'm down 30% I think


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## Nemo2 (Mar 1, 2012)

jamesbe said:


> Wow I moved half my position in this over to Acq a few months ago to stop the bleeding, I'm thinking I may just cut my losses and move the rest, I'm down 30% I think


Must've bought after you.....down 15.43% at this moment. Undecided whether to hold on, sell now, or wait until year end and Loss Harvest if it's still mired.


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## jamesbe (May 8, 2010)

Well I really want some BCE so I'm going to stop the bleeding and move over to BCE for something more stable.


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## canehdianman (Apr 7, 2009)

I am glad I didn't have any spare cash months ago when I started looking at this. It keep dropping. I think the market is pricing in a dividend cut.


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## blin10 (Jun 27, 2011)

you guys know the markets are dropping right ? energy companies taking a dive not just erf


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## canehdianman (Apr 7, 2009)

blin10 said:


> you guys know the markets are dropping right ? energy companies taking a dive not just erf


Year to date ERF is down 26%.

TSX is up 0.6%.

ZEO (BMO S&P/TSX Equal Weight Oil & Gas Index ETF) is down 6.3%.


ERF is definitely getting hit harder than most other energy companies.


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## jamesbe (May 8, 2010)

I've got other energy holdings that are doing well or breaking even ERF was just getting hammered. Right or wrong, sold my position in ERF bought BCE and it went up today, so I can sleep well.


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## blin10 (Jun 27, 2011)

pwt down 15% ytd, pgf down 17% ytd, etc... but ya erf down more




canehdianman said:


> Year to date ERF is down 26%.
> 
> TSX is up 0.6%.
> 
> ...


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## blin10 (Jun 27, 2011)

man this thing is getting killed... it's almost at 2008 low


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## PMREdmonton (Apr 6, 2009)

This one looks like a trap to me for those who seek large dividends.

They are barely profitable and CapEx has been higher than operational cash flow which means dividend is basically supported out of debt issues. There has been steady decline in their book value with less assets, higher debts and there is evidence of shareholder dilution over the past few years.

This dividend is unsustainable in the long run but the bright side for the company is that they don't have much debt and if the natural gas price increases the company should survive.

If management were doing their job properly they should halt the dividend to avoid cash drain and maintain liquidity until they are solidly profitable again once the natural gas glut is eliminated either through export or through development of increased demand in US/Canada (most likely from truck fleets and power plants).


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## al42 (Mar 5, 2011)

50% Dividend Cut...Not good, I think this will give the rest of the former trusts a reason to cut.

Despite our operational success year-to-date, commodity prices have weakened and resulted in lower forecast cash flows. While our balance sheet is currently strong and we have significant liquidity with respect to our credit capacity, we are reducing our monthly dividend from CDN$0.18 per share to CDN$0.09 per share

http://www.theglobeandmail.com/globe-investor/news-sources/?date=20120612&archive=cnw&slug=C8143


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## blin10 (Jun 27, 2011)

it is good, people expected divi cut and got it so company will spend less cash and not sell other other assets


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## al42 (Mar 5, 2011)

BNP down close to 7% today...I'm guessing there is a cut coming here soon as well.


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## blin10 (Jun 27, 2011)

al42 said:


> BNP down close to 7% today...I'm guessing there is a cut coming here soon as well.


yap I was thinking same thing today...


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## zylon (Oct 27, 2010)

*ERF - I admit it ... i didn't sell*

I was fully expecting a divy cut, just didn't know how much it would be.
So far, it seems the market priced this quite efficiently as price was
down only 4-5% on the news.

After the dust settles, I'll likely add to my position.
ERF weighting is roughly 45% oil; 55% natgas.

Over $50 per share (Cdn) has been returned to shareholders since 1999.










http://www.enerplus.com/investor/dividends/dividends.cfm


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## blin10 (Jun 27, 2011)

same here


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## blin10 (Jun 27, 2011)

started position in bnp with 150 shares, i just can't pass this price up, probably will sink more will get more


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## w0nger (Mar 15, 2010)

just a quick bump, I entered into this at 15.50 a couple weeks ago... anyone else still in enerplus?


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## blin10 (Jun 27, 2011)

still in it ;o


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## zylon (Oct 27, 2010)

me too :encouragement:


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## blin10 (Jun 27, 2011)

let's go $20 :>


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## gladaki (Feb 23, 2014)

Enerplus is one of the other beaten up player. I am just not sure why they are down so much from 2012. Any insights on this company


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