Another contender in the Roth IRA race is PrimeWest Energy Trust (PWI: chart, web, news). PrimeWest is another Canadian Royalty Trust that deals in the production, extraction, development, and marketing of oil and natural gas. Most of the production from PWI comes from the Western Canada Sedimentary Basin, and produces nearly 40,000 boe per day.
Like my Provident Energy (PVX: chart, web, news) holdings, PWI pays a monthly dividend distribution that totals about 13% annually. On top of that, TD Ameritrade has indicated that PWI does subscribe to a DRIP program, allowing my monthly dividends to be rolled right back into the stock.
PrimeWest has a healthy profit margin at 43% over the last twelve months, but remember, this does include a period of high oil and gas prices ($75, and $14 respectively). Quarterly earnings are growing at a respectable 20% rate, year over year, and the diluted EPS is a modest 2.76 per share.
A big mark against the trust is the $382 million in debt as of the most recent quarter, and only $50 million in cash. The oil industry is an expensive playground to play in, but I’d like to see the cash on hand match up a little better.
The PWI payout ratio (POR) is flirting with 114%, the quarterly revenue growth is in negative territory at -3.2%, and natural gas prices continued to be weak due to supply, all of which explains why they just cut their next dividend payment to $0.25 Canadian, or about $0.22 USD.