# Energy recommendations?



## AGHFX (Aug 31, 2012)

Hey guys, I'm pretty new to investing and I'm looking to add an energy stock to my core portfolio. My online brokerage offers a synthetic DRIP for certain stocks so I've been looking at my options there. I guess the first thing I'm wondering is does anyone recommend I invest in a company (I've been looking at AQN, NPI, PHX) or would it be wise to invest in a trust or ETF that is diversified across the different energy types?

To add a bit more to context this is something I plan to hold long term and hopefully watch grow with the dividends reinvested.

I appreciate any contribution!


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## PMREdmonton (Apr 6, 2009)

CVX is a great company with strong dividend growth.

RDS.B is also very good and pays around 5% yield.

If you want Canadian lots of good choices but CNQ probably most undervalued amongst the majors but they are highly levered to oil so it is a bit of a call on oil prices. CVE has more well rounded oil assets but their growth is in heavy oil. SU is also a great long-term play. COS is a good choice for yield in a major but their growth prospects are less certain but they do upgrading so they aren't as captive to low heavy oil prices.

I also never asked if you were buying this for RRSP, TFSA or taxable account.

If you want to be contrarian pick a strong but small natural gas company. I think Birchcliff Energy is a good one in this space. It is backed by Seymour Schulich so they should be able to ride out the current storm and they are a very low cost producer. NGL prices are plummeting and that makes me fear for Peyto - probably overvalued right now because that is why they have been so strong compared to other nat gas companies.


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## Spidey (May 11, 2009)

It for some reason tends to be the Rodney Dangerfield of the energy space but I find HSE a consistent dividend payer (4.6%) with pretty good fundamentals. Another one that I hold, that does get a lot of respect, is CPG with a 6.7% dividend. 

From a personal perspective, however, I'm waiting to see how the fall plays out before adding any more energy.


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## PMREdmonton (Apr 6, 2009)

I almost forgot but if you want to get really, really contrarian you could do coal. 

You could buy Peabody which is a low cost producer and has tons of coal both in the US and Australia. They also have lots of met coal and thermal coal. They have been punished quite a bit but are financially pretty strong, pay a small dividend and may be able to grow by acquiring some other companies that fail.

Teck Resources is also starting to look like a value again. You get lots of high quality copper and met coal in this one.

Lastly there is ANR which doesn't pay a dividend and have some liquidity concerns but if coal prices firm up they can really take off with their high quality met coal holdings.


For something less risky but needing a 1-2 year timeframe, Cameco is a good buy. They are a very strong uranium player in a world that is about to face a big uranium shortage. The Fukushima disaster collapsed spot uranium prices and delayed lots of junior urnanium projects. Now they are not about to come online and the world is about to face a big shortage as nuclear fuel that was gleaned from decommissioned Russian nuclear warheads is about to end. There is no way to meet the deficit. While Germany and Japan talk about switching away from nuclear they still both need it and don't have a credible alternative. Meanwhile, India and China need more energy and are building many nuclear reactors that will add to the world's demand for uranium. Now the other kicker for Cameco is finally getting their second big uranium mine up and running which will be a second catalyst. 

In terms of foreign oil you should also consider BP, Total, Connoco Phillips and Statoil.


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## Gotcha (Feb 5, 2012)

What about XEG?

Diversification with a MER (Management Expense Ratio) of 0,6%. Dividend yield isn't that high though (2,2%).


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## AltaRed (Jun 8, 2009)

Gotcha said:


> Dividend yield isn't that high though (2,2%).


Energy companies typically do not pay much in the way of yield. They think they can do better through re-investment.


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