Monthly Dividend Stock In Focus: Tamarack Valley Energy

Published on April 30th, 2025 by Felix Martinez

Tamarack Valley Energy (TNEYF) has two appealing investment characteristics:

#1: It is offering an above-average dividend yield of 4.1%, which is roughly three times the average dividend yield of the S&P 500.#2: It pays dividends monthly instead of quarterly.Related: List of monthly dividend stocks

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: Tamarack Valley Energy

Tamarack Valley Energy’s combination of an above-average dividend yield and a monthly dividend makes it an attractive option for individual investors.

But there’s more to the company than just these factors. Keep reading this article to learn more about Tamarack Valley Energy.

Business Overview

Tamarack Valley Energy engages in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids in the Western Canadian Sedimentary Basin. Its oil and natural gas properties are the Cardium, Clearwater, Charlie Lake, and Enhanced Oil Recovery assets located in the province of Alberta, Canada.

The company was formerly known as Tango Energy and changed its name to Tamarack Valley Energy in June 2010. Tamarack Valley Energy was formed in 2002 and is headquartered in Calgary, Canada.

As an oil and gas producer, Tamarack Valley Energy is highly cyclical due to the dramatic fluctuations in oil and gas prices. The company produces liquids and gases in an approximate ratio of 85/15 and is highly sensitive to the fluctuations in the price of oil. It has reported losses in 6 of the last 10 years and initiated a dividend only at the beginning of 2022.

On the other hand, Tamarack Valley Energy has several advantages compared to 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.

Source: Investor Presentation

Tamarack delivered strong 2024 results with Q4 production averaging 66,104 boe/day and full-year free funds flow of $386.9 million. Despite weaker commodity prices, the company returned over $215 million to shareholders through dividends and buybacks, retiring 6% of its float. Net debt dropped 21% to $775.4 million, reducing the net debt-to-adjusted funds flow ratio to 0.9 from 1.3.

The Clearwater Infrastructure Partnership expanded to include a 13th Indigenous community, bringing total asset contributions to $220.8 million and generating over $180 million in cash to reduce debt. Tamarack invested $439.3 million in development, drilling over 100 Clearwater wells and boosting capital efficiency. Reserves rose 6% to 238.3 million boe, replacing 179% of annual production.

Margins improved due to stronger heavy oil pricing, lower costs, and higher capital efficiency. Tamarack maintained its focus on shareholder returns, increasing its dividend and ending the year with $423.4 million in available credit, plus access to an additional $125 million.

Growth Prospects

Tamarack Valley Energy has posted one of the highest reserve growth rates in its peer group in recent years. Even better, the company has ample room for future growth.

Source: Investor Presentation

Exceptionally high returns characterize the reserves in this area. It is thus evident that Tamarack Valley Energy has a significant competitive advantage when compared to its peers.

Moreover, the company has a promising 5-year growth plan:

Source: Investor Presentation

It expects to grow its production at an average annual rate of 3%-5% and approximately double its free funds flow per share over the next five years, partly thanks to material share repurchases. None of the well-known oil majors has such an ambitious growth plan.

On the other hand, as an oil and gas producer, Tamarack Valley Energy is highly sensitive to the fluctuations in oil and gas prices.

Thanks to the rally of the prices of oil and gas to 13-year highs in 2022, Tamarack Valley Energy posted earnings per share of $0.55 in 2022. However, the price of oil has slumped nearly 50% from its highs in 2022, while the price of natural gas has also collapsed.

Given the promising growth plan of Tamarack Valley Energy, as well as the highly cyclical nature of the oil and gas industry, we expect the earnings per share of Tamarack Valley Energy to increase significantly this year to $0.40 per share from $0.21 per share in 2024

Dividend & Valuation Analysis

Tamarack Valley Energy is currently offering an above-average dividend yield of 4.1%, which is about three times the yield of the S&P 500. The stock is an interesting candidate for income investors, but they should be aware that the dividend is far from safe due to the dramatic price cycles of oil and gas.

Tamarack Valley Energy has a reasonable payout ratio of 27%. Additionally, the company maintains a solid financial position.

Moreover, it is critical to note that Tamarack Valley Energy initiated a dividend only in 2022, amid multi-year high commodity prices. It failed to offer a dividend in the preceding years, as it incurred material losses in most of those years. Therefore, it is evident that the company’s dividend is far from safe.

In reference to the valuation, Tamarack Valley Energy is currently trading for 9.9 times its expected earnings per share this year. Given the high cyclicality of the company, we assume a fair price-to-earnings ratio of 12.5, which is a typical mid-cycle valuation level for oil and gas producers.

Therefore, the current earnings multiple is much lower than our assumed fair price-to-earnings ratio. If the stock trades at its fair valuation level in five years, it will incur a 5% annualized return.

Taking into account the 6.0% annual growth of earnings per share, the 4.1% current dividend yield, and a 5% annualized tailwind of valuation level, Tamarack Valley Energy could offer a 15.1% average annual total return over the next five years.

The expected return signals that the stock is a good long-term investment, as we have passed the peak of the oil and gas industry’s cycle.

Final Thoughts

Tamarack Valley Energy has been thriving since early 2022, thanks to an ideal environment of above-average oil prices. The stock is offering an above-average dividend yield of 4.1%, with a decent payout ratio of 27%. As a result, it is likely to entice some income-oriented investors.

However, the company has proven highly vulnerable to the fluctuations in the price of oil. As this price appears to have passed its peak for good, the stock is currently highly risky.

Moreover, Tamarack Valley Energy is characterized by low trading volume. This means that it is hard to establish or sell a large position in this stock.