Monthly Dividend Stock In Focus: Pine Cliff Energy

Updated on April 10th, 2025 by Felix Martinez

Pine Cliff Energy (PIFYF) has a rather unique, appealing investment characteristic: it pays dividends monthly instead of quarterly. There are only 76 such stocks today, a list of which you can find below.

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:

 

Pine Cliff Energy’s combination of a high dividend yield and a monthly dividend makes it appealing to individual investors.

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

Business Overview

Pine Cliff Energy acquires, explores, develops, and produces oil, natural gas, and natural gas liquids in the Western Canadian Sedimentary Basin.

The company primarily holds interests in oil and gas properties in the Southern Alberta, Southern Saskatchewan, and Edson areas, as well as in the Viking and Ghost Pine areas of Central Alberta. It was formed in 2004 and is headquartered in Calgary, Canada.

Pine Cliff Energy produces oil and gas at a ratio of 21/79, so it should be considered primarily a natural gas producer. As a gas producer, Pine Cliff Energy is highly cyclical due to the dramatic swings in the price of natural gas. Notably, the company has reported losses in seven of the last ten years and initiated a dividend only in 2022.

On the other hand, Pine Cliff Energy claims to have some advantages over well-known oil and gas producers.

First, the company claims that it has a decent balance sheet (more on this later), which is paramount in the oil and gas industry, which is characterized by fierce downturns every few years.

Source: Investor Presentation

In addition, Pine Cliff Energy’s management team owns 14% of the company; hence, it is aligned with the shareholders. This is an essential characteristic that investors should not undermine.

Moreover, Pine Cliff Energy has the lowest natural production decline rate among all Canadian public producers. This reduces the capital expenses required to sustain a given level of production.

Like almost all oil and gas producers, Pine Cliff Energy incurred losses in 2020 due to the collapse of oil and gas prices caused by the coronavirus crisis.

However, thanks to the massive distribution of vaccines worldwide, global demand for oil and gas recovered in 2021, and thus, the company became profitable in that year.

Even better for Pine Cliff Energy, the Ukrainian crisis triggered a rally in oil and gas prices to 13-year highs in 2022. As a result, the company posted 10-year high earnings per share of $0.22 in that year. It also initiated a dividend in June 2022, after more than a decade without one.

However, the price of natural gas has slumped since early last year due to abnormally warm winter weather for two consecutive years. This has resulted in exceptionally high gas inventories in North America.

Pine Cliff Energy ended 2024 with a stronger Q4 performance due to higher AECO natural gas prices. Adjusted funds flow reached $8.6 million for the quarter and $38 million for the year, though both were down from 2023. Annual production averaged 23,248 Boe/d, up 13% year-over-year. The company spent $8.9 million in capital, earned $10.5 million from asset sales, and paid $25.6 million in dividends—all while keeping its payout ratio below 100%, supported by a successful hedging program.

Despite not drilling in 2024, Pine Cliff grew its reserves. A 2023 acquisition boosted low-decline production and drilling inventory, helping 2P reserves rise 5.6%. Technical revisions and land swaps added new two-mile drilling locations and early potential in the Basal Quartz oil play. Pine Cliff now holds 18.4 net two-mile locations and controls key gas infrastructure to support future growth.

The company plans to resume drilling in late 2025, depending on commodity prices. It announced a 25-year natural gas supply deal for a new Alberta data center, diversifying markets without added transport or hedge costs. Hedging and pipeline strategies remain key to protecting cash flow and supporting shareholder returns.

Growth Prospects

As mentioned above, Pine Cliff Energy has the lowest natural production decline rate among all Canadian public producers.

Source: Investor Presentation

The natural decline of the producing wells is paramount in the oil and gas industry, as high decline rates result in excessive capital expenses required to sustain a given level of production. Thus, Pine Cliff Energy has a significant competitive advantage over its peers.

On the other hand, as an oil and gas producer, Pine Cliff Energy is highly sensitive to the inevitable cycles of oil and gas prices. More precisely, as the company produces 79% gas and 21% oil, it is especially sensitive to the cycles of natural gas prices.

Thanks to the rally in oil and gas prices to 13-year highs in 2022, Pine Cliff Energy posted 10-year high earnings per share in 2022. However, both prices have plunged from their highs in 2022. As a result, the company is likely to post much lower earnings per share this year.

Given the highly cyclical nature of the oil and gas industry and our expectations for slightly higher gas prices in the upcoming years, we expect Pine Cliff Energy’s earnings per share to grow by about 5.0% per year on average over the next five years, from $0.07 in 2025 to $0.08 in 2026.

Dividend & Valuation Analysis

Pine Cliff Energy is currently offering a decent dividend yield of 2.5%. It is thus not a pure play for income-oriented investors, and those investors should be aware that the dividend is far from safe due to the dramatic cycles of oil and gas prices.

Pine Cliff Energy’s forward payout ratio is 30%, which is low, particularly for the energy sector.

Overall, the balance sheet has weakened in recent quarters, and thus, the company will be vulnerable whenever the next downturn in the energy sector occurs.

Moreover, it is critical to note that Pine Cliff 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.

About valuation, Pine Cliff Energy is currently trading for 5.8 times its expected earnings per share this year. Given the company’s high cyclicality, we assume a fair price-to-earnings ratio of 10.0 for the stock.

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 7.3% annualized tailwind in its returns.

Taking into account the 5.0% annual growth of earnings per share, the 2.5% current dividend yield, and a 7.3% annualized tailwind of valuation level, Pine Cliff Energy could offer a ~15% average annual total return over the next five years.

This is a very high expected return. The stock is highly risky right now, and hence, investors should wait for the next downturn in the energy sector before evaluating it again despite strong projected returns.

Final Thoughts

Pine Cliff Energy offers a dividend yield of just 2.5%, which is just over the S&P 500’s 1.5% dividend yield. As a result, the stock isn’t particularly enticing for income investors.

However, the company has a weakening balance sheet. In addition, it has proved highly vulnerable to the cycles of oil and gas prices.

As these prices seem to have peaked in this cycle, the stock is highly risky right now. Therefore, investors should wait for a much lower entry point.

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

Additional Reading

Don’t miss the resources below for more monthly dividend stock investing research.

And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.