Parex Resources Inc. Maintains High-Yield Dividends Amid Colombian Oil Growth

Parex Resources Inc. (PXT), a Canadian oil and gas producer focused on Colombia, has solidified its position as a dividend stalwart in the energy sector. The company’s declaration of a C$0.385 quarterly dividend—annualizing to C$1.54 per share—highlights its commitment to shareholder returns even amid volatile energy markets. This article explores Parex’s dividend history, financial health, and the risks and rewards of investing in this high-yield stock.

Dividend History: Consistency and Growth

Parex has delivered steady dividend growth since 2021, with annualized payouts rising from C$0.64 per share in 2021 to C$1.54 in 2025 (see ). Key milestones include:
- 2023: A 20.8% increase to C$1.51 per share, driven by higher oil prices and production efficiencies.
- 2024: A further 2.6% rise to C$1.55 per share, reflecting operational stability.
- 2025: Maintaining C$1.54 per share, with the most recent dividend paid on March 18, 2025.

The dividend yield currently stands at 15.4% (as of March 2025), calculated using the stock’s closing price of C$10.56. This high yield places Parex among the top dividend payers in the energy sector.

Financial Health: Sustainable Payouts

Parex’s dividend sustainability is supported by strong fundamentals:
1. Payout Ratio: For Q1 2025, the payout ratio was ~33% (C$0.385 dividend ÷ C$1.16 EPS after currency adjustments), leaving ample room for growth.
2. Dividend Cover: At 2.0, earnings are twice the dividend payout, indicating financial resilience.
3. Cash Flow: The company projects C$425–465 million in funds flow for 2025, with a free funds flow midpoint of C$145 million, which will fund dividends and debt reduction.

Recent Q1 2025 results included a net income of C$81 million (C$0.82 per share) and C$122 million in operating cash flow, reinforcing its ability to sustain dividends despite a C$69 million net loss in Q4 2024 (due to non-cash impairments).

Risks and Considerations

• Oil Price Volatility: Parex’s operations depend on oil prices, which remain unpredictable. A prolonged dip could pressure cash flow.
• Geopolitical Risks: Colombia’s political stability and regulatory environment could impact production.
• Stock Price Volatility: The stock’s 52-week yield range (6.8% to 19.1%) reflects price swings, with the stock trading as low as C$8.05 and as high as C$22.59 in the past year.

Investment Takeaways

• Income Investors: The 15.4% dividend yield makes PXT attractive for income seekers, though they should monitor oil prices and geopolitical risks.
• Growth Potential: Colombia’s oil reserves and Parex’s operational focus offer long-term upside. The company aims to maintain production at 43,000–47,000 boe/d in 2025.
• Valuation: With a market cap of C$1.0 billion and C$98 million in cash, PXT appears undervalued relative to its peers.

Conclusion: A High-Yield Bet with Caution

Parex Resources Inc. stands out as a dividend powerhouse in the energy sector, offering a 15.4% yield backed by consistent payout growth and strong cash flow. Its Colombian operations, while subject to external risks, provide a stable base for returns. However, investors must weigh the high yield against potential headwinds like oil price fluctuations and stock volatility.

Key Statistics to Remember:
- Dividend Yield: 15.4% (as of March 2025).
- Payout Ratio: ~33%, with a dividend cover of 2.0.
- Market Cap: C$1.0 billion (98 million shares).

For income-focused investors willing to navigate energy market risks, Parex’s dividends make it a compelling, though not without risk, opportunity.