Monthly Dividend Stock In Focus: Paramount Resources

Published on April 10th, 2025 by Felix Martinez

Paramount Resources (PRMRF) has two appealing investment characteristics:

#1: It is offering an above average dividend yield of 3.8%, which is more than twice the dividend yield of the S&P 500.#2: It pays dividends monthly instead of quarterly.

You can download our full Excel spreadsheet of all monthly dividend stocks (along with metrics that matter, like dividend yield and payout ratio) by clicking on the link below:

Monthly Dividend Stock In Focus: Paramount Resources

The combination of an above-average dividend yield and a monthly dividend renders Paramount Resources appealing to individual investors.

But there’s more to the company than just these factors. Keep reading this article to learn more about Paramount Resources.

Business Overview

Paramount Resources explores for and produces oil and natural gas from conventional and unconventional fields in the Western Canadian Sedimentary Basin.

The company holds interests in the Karr and Wapiti Montney properties, which cover an area of 185,000 net acres south of Grande Prairie, Alberta. It was founded in 1976 and is based in Calgary, Canada.

Paramount Resources has an average production rate of about 100,000 barrels per day and total proved reserves of 415 million barrels of oil equivalent, with oil and gas at a 49/51 ratio.

Source: Investor Presentation

It is also important to note that 46% of the company is owned by insiders. This is a remarkably high percentage of ownership, which results in the alignment of interests between insiders and the other individual shareholders.

As an oil and gas producer, Paramount Resources is highly cyclical due to the dramatic swings in oil and gas prices. The company has reported losses in five of the last ten years and resumed its dividend payments only in the summer of 2021, after 22 years without a dividend payment.

On the other hand, Paramount Resources has some advantages over well-known oil and gas producers. Most oil and gas producers have been struggling to replenish their reserves due to the natural decline of their producing wells.

Paramount Resources reported strong 2024 results, with a record production of 98,490 Boe/d and $815 million in cash from operations. The company sold its Karr, Wapiti, and Zama assets to Ovintiv for $3.3 billion and issued a $15.00 per share special distribution. It also repurchased 5.7 million shares for $177 million and focused capital spending on Duvernay developments, drilling 58 wells and advancing the Alhambra Plant.

At year-end, Paramount held $188 million in net debt and $564 million in investment securities. Since 2021, it has returned $2.97 billion to shareholders and maintains strong liquidity with $830 million in cash and investments, plus a $500 million undrawn credit facility. Fox Drilling continues operating six rigs, supporting internal and third-party projects.

Excluding sold assets, reserves totaled 242.5 MMBoe (50% liquids) with an NPV10 of $2.46 billion. For 2025, Paramount plans $760–$790 million in capital spending, targeting 37,500–42,500 Boe/d average production. Volumes rebounded in Q4 as the Alhambra Plant came online.

Growth Prospects

The company has ample room for production growth thanks to accelerating its development efforts in its producing areas.

Source: Investor Presentation

Paramount Resources has a proven record of identifying key resource areas with a low decline rate and more than 15 years of production.

On the other hand, as an oil and gas producer, Paramount Resources is highly sensitive to oil and gas price cycles. This is clearly reflected in the company’s performance record, which has posted material losses in five of the last ten years.

The price of oil has slumped significantly from its peak in 2022. As a result, the company is likely to post much lower earnings per share this year.

Given Paramount Resources’ promising production growth prospects and the highly cyclical nature of the oil and gas industry, we expect Paramount Resources’ earnings per share to grow by about 1.0% per year on average over the next five years, from an estimate of $0.89 this year to $1.73 in 2027.

Dividend & Valuation Analysis

Paramount Resources is currently offering an above-average dividend yield of 3.8% , which is more than double the 1.5% yield of the S&P 500. The stock is thus an interesting candidate for income-oriented investors, but they should be aware that the dividend is far from safe due to the dramatic cycles of oil and gas prices. Paramount Resources has a decent payout ratio of 55%.

However, it is critical to note that Paramount Resources reinstated its dividend only in mid-2021, after 22 years without a dividend payment.

The company failed to offer a dividend in the preceding years, as it incurred material losses in many of those years. Therefore, the company’s dividend is far from safe.

Regarding valuation, Paramount Resources is currently trading for 8 times its expected earnings per share of $0.89 this year.

Given the company’s high cyclicality, we assume a fair price-to-earnings ratio of 12.5, which is a typical mid-cycle valuation level for oil and gas producers.

Considering the 1.0% annual growth of earnings per share, the 3.8% current dividend yield, and a 6% annualized tailwind of valuation level, Paramount Resources could offer a ~10% average annual total return over the next five years.

The expected return signals that the stock will be attractive in the long term, as we have passed the peak of the oil and gas industry’s cycle. Therefore, investors should wait for a lower entry point.

Final Thoughts

Thanks to the above-average oil and gas prices, Paramount Resources has thrived since early 2022. The stock offers an above-average dividend yield of 3.8% and a payout ratio of 55%, which is likely to entice some income-oriented investors.

However, the company has proved highly vulnerable to oil and gas price cycles. As the price of oil has peaked and may have a material downside, the stock is risky right now.

Moreover, Paramount Resources has a below-average trading volume. This means that it may be difficult to establish or sell a large position in this stock.