7) Mart Resources (MAUXF.PK): This is another oil producer with land in Nigeria. It holds the Umusadege ?eld, which is being developed in partnership with Midwestern and Suntrust Oil Companies. Its UMU-9 well was drilled successfully and the share price rose more than 50% in early 2012.
Mart is debt free, it has a decent cash flow on a quarterly basis and it initiated a quarterly dividend of $0.05 per share in July 2012. This indicates the company's belief that the turbulence and the social unrest in Nigeria will not impact its operations and eventually the funds from operations. The dividend yield is as high as 13% based on the closing of December 12, 2012.
The company has an Enterprise Value of $562M currently. The Umusadege field's gross production is 12,500 bopd currently and Mart's share of total gross production before taxes and royalties from the Umusadege field fluctuates between 82.5% (before capital cost recovery) and 50% (after capital cost recovery). An average 65% share gives Mart a net production of 8,125 bopd. So it trades for a decent $69,000/bopd.
Mart's 2P reserves in the Umusadege ?eld are 17.8MMboe (as of Mar 2012), which gives a $31.5/boe rich ratio on a reserves valuation basis.
To diversify and avoid future operating disruptions, the company is also working on a second pipeline as an alternative to the main current pipeline. The results from its recent UMU-10 well are also supporting the dividend sustainability as the rig encountered 479 foot gross hydrocarbon pay in 20 sands.
Owning dividend stocks has some important advantages. The household budgeting becomes more flexible, the portfolio volatility drops substantially and there is also the power of supercharged compounding. The dividends can be reinvested, giving our portfolio bigger returns.
This being said, buying dividend companies is an investing strategy that is followed by many investors worldwide. As long as these yielding companies also offer some moderate growth yoy and our dividend portfolio has exposure to more than one sector, then we can sleep better at night too.