With a price-to-book value ratio of just 0.44, Lightstream is the cheapest oil and gas producer on the Toronto Stock Exchange with a market cap above CAD 1 billion. To put that in perspective, you can buy Lightstream for about 75% less than the typical Toronto stock, which trades at 1.8x book value.
Lightstream is highly leveraged to oil prices, so if you're bullish on oil over the long haul, then you have to be bullish on Lightstream.
If oil rises, you'll see your share price and dividends rise along with it. Even if oil prices go down, the 13.1% yield will limit our losses and could still give us big gains.
Of course, any stock yielding double digits has to make you wonder if something is wrong with it. Lightstream's 13.1% yield shows the market is skeptical about its ability to maintain its dividend and grow production at the same time.
But in June, management stressed it was determined to keep its dividend intact. I believe it will make good on its promise.
Sure, I could I be wrong, but the point is, the market has already priced in a dividend cut. So if the cut doesn't happen, the share price will almost certainly rebound.
Even if it does cut the dividend, there's an upside: The cash the company saves will drive long-term production growth and improve the health of the business. In the meantime, we're getting paid a whole lot to hold a solid portfolio of assets.
As I said, this pick isn't for your mortgage money, so I didn't include it in our Canadian Solution report, which is reserved for stocks so reliable that they can get you through anything. And while they don't yield as much as Lightstream, they aren't exactly stingy, either. They should send you a stream of fat dividend checks for years ahead.
Speaking of distributions, if you like getting paid to hold a stock, you'll love investing in Canada. This is a country where executives believe in paying back investors, and where 10% dividends are routine.
While the tightwads of the Dow dribble out weak 2% dividends, Canadian firms routinely crank out five times more—and they send them out monthly.