Rising cash flow cuts Ovintiv’s risk

Article Excerpt

OVINTIV INC. $58 is a buy. The company (Toronto symbol OVV; Conservative Growth Portfolio, Resources sector; Shares outstanding: 264.1 million; Market cap: $15.3 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.8%; TSINetwork Rating: Average; www.ovintiv.com) operates four core properties: Montney (B.C.), Permian (Texas), Anadarko (Oklahoma) and Uinta (Utah). Ovintiv continues to allocate 50% of its free cash flow (regular cash flow less capital)—forecast to rise 65% for 2024 to $1.90 billion U.S.—to dividends and share buybacks. The current annual dividend rate of $1.20 U.S. a share yields 2.8%. The company applies the other 50% to debt repayments and acquisitions. As of June 30, 2024, its total debt was $6.09 billion U.S., which equals 55% of its market cap. It also held cash of $8 million U.S. Ovintiv is a buy. buy…