Paramount Resources Jumps 10% After Dividend Boost

Paramount Resources (TSX:POU) saw a flood of new investors wanting in on the company’s dividend. Shares jumped 10% overnight.

| More on:

Paramount Resources (TSX:POU) shares jumped 10% in early morning trading on Dec. 16 after the company started its new dividend. Paramount now trades at $22.85 as of writing with a price-to-earnings ratio of 7.09.

What happened?

Research analysts continue to weigh in on Paramount Resources, with a consensus “buy” recommendation for the stock. The average target price now sits at $28.59 — a potential upside of 25% as of writing.

After Paramount’s most recent earnings report in November, analysts started to up their targets for the energy company. National Bank, Royal Bank, and Scotiabank all came out in support of its recent growth and the addition of a dividend.

That dividend is likely what caused investors to buy the stock, as the company stated investors of record on Dec. 15 would receive its dividend of $0.06 per share starting Dec. 31. This represents $0.72 annually from its dividend — a yield of 3.47% as of writing.

So what?

Nothing of note really happened with Paramount. Instead, it’s the new dividend that likely caused the jump. Still, that doesn’t make the company a poor investment.

The $3.22 billion company’s assets continue to perform well, creating free cash flow that have been impressive, according to analysts. Despite facility constraints, it’s been delivering enormous returns to shareholders. The company is currently up a whopping 305% this year alone and climbing.

Yet the company remains a steal, even with all this growth. It trades at 7.09 times earnings, and 1.29 times its book value, making it a value stock — especially when you take into consideration its dividend yield of 3.47%.

Now what?

Investors may not be able to get the first dividend payment today, but you can certainly latch onto this stock for strong returns. Paramount continues to see its investments rise, and so do analysts. As energy prices continue to climb as well, the company is surely able to bring in more long-term value.

And with prices still low compared to its value, it’s a great time to pick up Paramount stock at these levels. Even after the 10% jump. Besides, as a monthly dividend payer, there’s always next month!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.

More on Energy Stocks

Pumpjack in Alberta Canada
Energy Stocks

1 Magnificent Energy Stock Down 17% to Buy and Hold Forever

Down over 17% from all-time highs, Headwater Exploration is a TSX energy stock that offers you a tasty dividend yield…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Is Cenovus Energy Stock a Good Buy?

Cenovus Energy (TSX:CVE) stock is primed for capital gains and strong total returns in 2025, driven by strategic buybacks and…

Read more »

Trans Alaska Pipeline with Autumn Colors
Energy Stocks

2 High-Yield Dividend Stocks That are Screaming Buys Right Now

Natural gas stocks like Peyto Exploration and Development are yielding above 7% today and look undervalued as natural gas strengthens.

Read more »

chart reflected in eyeglass lenses
Energy Stocks

Best Stock to Buy Right Now: Canadian Natural Resources vs Cenovus?

Want to invest in Canadian energy? Canadian Natural Resources and Cenovus Energy are two of the largest, but which one…

Read more »

oil pump jack under night sky
Energy Stocks

Where Will Cenovus Stock Be in 1/3/5 Years? 

Let's dive into whether Cenovus (TSX:CVE) stock is worth buying right now and where this stock could be headed over…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Best Stock to Buy Right Now: Canadian Natural Resources vs Suncor?

These energy giants are returning significant cash to shareholders.

Read more »

how to save money
Energy Stocks

This 7.8% Dividend Stock Pays Cash Every Month

This monthly dividend stock is an ideal option, with a strong base, growing operations, and a strong future outlook.

Read more »

data analyze research
Energy Stocks

The Smartest Dividend Stocks to Buy With $2,000 Right Now

Dividend stocks like Canadian Natural Resources (TSX:CNQ) can amplify your wealth.

Read more »