Buying into plentiful resources of oil in politically secure areas seems like a prudent hedge against the above outlined risks. It is fascinating to me that even in a time when we are in a low growth environment in the US, Japan, and the EU that oil prices are still over $100 per barrel. As long as they stay in this region there are many companies that will do well financially. Suncor is one of them.
Reasons for putting Suncor (SU) into the portfolio:
- Long life oil sands resources in Canada
- 50-60% production growth between now and 2020
- Returning cash to shareholders via stock buybacks
- Over the last five years, the company has been able to grow its dividend payout at a CAGR of 35 percent.
- Low payout ratio with room to increase dividends and buybacks