Should You Buy This Energy Stock for Its 9.4% Dividend Yield?
Written by Aditya Raghunath at The Motley Fool Canada
Valued at a market cap of $222.4 million, Alovopetro Energy (TSXV:ALV) stock is up more than 190% in the last five years. After adjusting for dividends, cumulative returns are closer to 309%. Despite these market-beating gains, the energy stock offers you a tasty dividend yield of over 9% in 2025.
Moreover, it also trades 43% below all-time highs, allowing you to buy the dip and gain exposure to a quality energy stock at a lower multiple.
Let's see if you should consider owning this high-dividend stock at its current price.
Alvopetro Energy has established itself as Brazil's first integrated onshore natural gas producer. It continues to deliver exceptional shareholder returns through disciplined capital allocation and strategic positioning in a growing energy market.
The Calgary-based company operates primarily in Brazil's Reconcavo Basin near Salvador, leveraging the country's emerging natural gas market, where 32% of the supply is currently imported. Alvopetro's Q1 production reached 2,446 barrels of oil equivalent per day, with 95% of the output comprising natural gas, demonstrating a focused strategy in this high-demand commodity.
Financial performance remains robust, as Alvopetro generated $9.2 million in funds flow from operations in the March quarter. It also maintained an impressive 80% operating netback margin despite temporary elevated royalties from a regulatory dispute.
The company's disciplined approach allocates 47% of its funds flow to reinvestment, 48% to stakeholder returns, and 5% to building financial resources.
Alvopetro's growth strategy centers on two key assets. The Caburé field, where the company holds a 56.2% working interest, features a unitized development with eight wells and production capacity of 21.2 million cubic feet per day. It also owns 100% of the critical midstream infrastructure, including an 11-kilometre transfer pipeline and a gas processing plant with a capacity of over 18 million cubic feet per day.
The Murucututu project represents significant expansion potential, with 2P (sum of proven and probable) reserves of 4.6 million barrels of oil equivalent and additional contingent and prospective resources totalling 14.7 million barrels of oil equivalent. Recent drilling results from the 183-D4 well showed 61 metres of potential natural gas pay, with completion planned for Q3 of 2025.
Beyond Brazil, Alvopetro has established a Western Canadian growth platform targeting the Mannville Stack heavy oil fairway, where multilateral drilling technology offers attractive economics. It holds a 50% working interest in 8,800 net acres with potential for over 100 drilling locations.
With a current enterprise value of $208 million and an annualized dividend yield of 9.4%, Alvopetro provides investors with exposure to Brazil's expanding natural gas market through a proven management team that delivers strong operational execution and shareholder-focused capital allocation.
Analysts expect Alvopetro's revenue to increase from $65.7 million in 2024 to $126 million in 2029. Compared to this, free cash flow is forecast to grow from $28 million to $71 million during this period.
If the high dividend stock is priced at 10 times forward free cash flow, it should rise by more than 200% over the next four years. After adjusting for dividend reinvestments, cumulative returns could be closer to 250%.
Alovopetro's annual dividend payout in 2025 is expected to total around $20 million, suggesting that investors can anticipate consistent dividend hikes through 2029. Bay Street remains bullish on the dividend stock and expects it to gain over 25%, given consensus price targets.
The post Should You Buy This Energy Stock for Its 9.4% Dividend Yield? appeared first on The Motley Fool Canada.
More reading
Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS]
Market Volatility Toolkit
Best Canadian Stocks to Buy in 2025
Beginner Investors: 4 Top Canadian Stocks to Buy for 2025
5 Years From Now, You'll Probably Wish You Grabbed These Stocks
Subscribe to Motley Fool Canada on YouTube
Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alvopetro Energy. The Motley Fool has a disclosure policy.
2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
3 hours ago
- Yahoo
UBS Sees Sluggish Growth for Conagra Brands, Inc. (CAG) in FY26
Conagra Brands, Inc. (NYSE:CAG) is one of the 7 best future food stocks to buy according to analysts. A close-up of a hand selecting a food or beverage item from a store shelf. UBS maintained a 'Hold' rating on Conagra Brands, Inc. (NYSE:CAG) on June 16, 2025, amid growth pressures and a projected decrease in earnings per share by fiscal 2026. However, most of these concerns are already reflected in the company's current low valuation. Meanwhile, its strong financial stability, supported by a 6.49% dividend yield and 14% free cash flow yield, helps balance the company's risk-to-reward profile. Moreover, the company streamlined its portfolio, reducing debt by finalizing the sale of its Chef Boyardee and Van de Kam's brands. Furthermore, Conagra Brands, Inc. (NYSE:CAG)'s recent launch of 50 new frozen food items in June 2025 is a demonstration of its commitment toward aligning with evolving consumer preferences. The company boasts a well-established portfolio, consisting of Birds Eye, Duncan Hines, and Slim Jim. It is one of the best future food stocks. While we acknowledge the potential of CAG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and 10 Low Risk High Reward Stocks Set to Triple by 2030. Disclosure: None.
Yahoo
4 hours ago
- Yahoo
UBS Sees Sluggish Growth for Conagra Brands, Inc. (CAG) in FY26
Conagra Brands, Inc. (NYSE:CAG) is one of the 7 best future food stocks to buy according to analysts. A close-up of a hand selecting a food or beverage item from a store shelf. UBS maintained a 'Hold' rating on Conagra Brands, Inc. (NYSE:CAG) on June 16, 2025, amid growth pressures and a projected decrease in earnings per share by fiscal 2026. However, most of these concerns are already reflected in the company's current low valuation. Meanwhile, its strong financial stability, supported by a 6.49% dividend yield and 14% free cash flow yield, helps balance the company's risk-to-reward profile. Moreover, the company streamlined its portfolio, reducing debt by finalizing the sale of its Chef Boyardee and Van de Kam's brands. Furthermore, Conagra Brands, Inc. (NYSE:CAG)'s recent launch of 50 new frozen food items in June 2025 is a demonstration of its commitment toward aligning with evolving consumer preferences. The company boasts a well-established portfolio, consisting of Birds Eye, Duncan Hines, and Slim Jim. It is one of the best future food stocks. While we acknowledge the potential of CAG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and 10 Low Risk High Reward Stocks Set to Triple by 2030. Disclosure: None.
Yahoo
4 hours ago
- Yahoo
UBS Sees Sluggish Growth for Conagra Brands, Inc. (CAG) in FY26
Conagra Brands, Inc. (NYSE:CAG) is one of the 7 best future food stocks to buy according to analysts. A close-up of a hand selecting a food or beverage item from a store shelf. UBS maintained a 'Hold' rating on Conagra Brands, Inc. (NYSE:CAG) on June 16, 2025, amid growth pressures and a projected decrease in earnings per share by fiscal 2026. However, most of these concerns are already reflected in the company's current low valuation. Meanwhile, its strong financial stability, supported by a 6.49% dividend yield and 14% free cash flow yield, helps balance the company's risk-to-reward profile. Moreover, the company streamlined its portfolio, reducing debt by finalizing the sale of its Chef Boyardee and Van de Kam's brands. Furthermore, Conagra Brands, Inc. (NYSE:CAG)'s recent launch of 50 new frozen food items in June 2025 is a demonstration of its commitment toward aligning with evolving consumer preferences. The company boasts a well-established portfolio, consisting of Birds Eye, Duncan Hines, and Slim Jim. It is one of the best future food stocks. While we acknowledge the potential of CAG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and 10 Low Risk High Reward Stocks Set to Triple by 2030. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
