Why All Retirees Should Own Canadian Natural Resources Limited Stock

Canadian Natural Resources Limited (TSX:CNQ)(NYSE:CNQ) is the perfect stock for retirees and those close to retirement. Here’s why.

| More on:
The Motley Fool

For those in or close to retirement, Canadian Natural Resources Limited (TSX: CNQ)(NYSE: CNQ) is the perfect investment. One great characteristic of the company is that it pays dividends with a fairly impressive yield. Another is that it is a proven performer when it comes to growing its stock value. These two characteristics can be rare to find together, but are necessary for retirees who need to generate monthly income while growing the wealth they have already accumulated.

Healthy, sustainable dividend payments

Retirees need a stable, consistent monthly income. While it may seem attractive to go out and buy the company with the highest dividends, it is equally important to ensure that that dividend is at the very least sustainable but preferably has a chance to grow. Canadian Natural Resources pays a $0.22-per-share quarterly dividend, and the annual yield is 2.32%. While this may not be the largest dividend for an energy company, it’s a dividend investors can bank on. Canadian Natural Resources has increased its dividend every year since its introduction in 2001. For the first half of the year, Canadian Natural Resources’ payout ratio was 30%, well below the key 75% threshold of a sustainable dividend.  Not only is this dividend easily sustainable, but increases in the future are likely. The company has more than doubled its dividend over the past two years.

Consistent stock performance

A good dividend payment means nothing to retirees if the company’s stock declines year after year, causing the investor to lose money on his initial invetment. While no stock is immune to economic cycles, Canadian Natural Resources has proven itself over time as a consistent performer. In fact, over the past 10 years the stock has appreciated by 225%!

Canadian Natural Resources asset structure is what affords the company such a healthy performance. It is well known as the low-cost Canadian oil sands producer, a status it has obtained by pursuing long-life, low-decline assets. In addition, it owns an excellent asset mix that includes natural gas, heavy and light crude oil, and natural gas liquids. This diverse asset base extends the type of economic environments in which Canadian Natural Resources can profit.

Another value-adding fact about Canadian Natural Resources is its share buybacks. In the first half of the year, it bought and cancelled 8 million of its shares, another way that the company  returns cash to shareholders.

Final thoughts

Canadian Natural Resources is the poster child for the type of stock retirees should be buying. Its growing dividend, its action of returning cash to shareholders, and its consistent stock performance combined with its potential for future performance are exactly what retirees need in an investment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Leia Klingel has no position in any stocks mentioned.

More on Energy Stocks

sources of renewable energy
Energy Stocks

This Renewable Energy Stock Is Down 35% and Ready to Soar

Northland Power has three new projects that will provide a boost to cash flows and returns for this renewable energy…

Read more »

man touches brain to show a good idea
Energy Stocks

3 No-Brainer Energy Stocks to Buy Right Now for Less Than $200

Three energy stocks with a bullish outlook as AI and other growth drivers continue to boost global energy demand.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Energy Stocks

TFSA Passive Income: 2 TSX Stocks for Retirees

These stocks have increased their dividends annually for decades.

Read more »

Dam of hydroelectric power plant in Canadian Rockies
Energy Stocks

With My Money, This is Hands Down the Canadian Utility Stock I’d Buy Again and Again

Hydro One is one of the best dividend stocks out there, so let's get into why.

Read more »

top TSX stocks to buy
Energy Stocks

Dividend Investing: 2 Top Energy Stocks Are Taking Off as Oil Prices Recover

Canadian Natural Resources (TSX:CNQ) and another low-cost oil stock that's yield-heavy and worth stashing away for years.

Read more »

golden sunset in crude oil refinery with pipeline system
Energy Stocks

Best Stock to Buy Right Now: Enbridge vs TC Energy?

Enbridge and TC Energy chalked up big gains in the past year. Is one stock still undervalued?

Read more »

Oil industry worker works in oilfield
Energy Stocks

PetroTal: Buy, Sell, or Hold in July 2025?

That juicy 12% dividend yield from PetroTal stock is enough to make any income investor do a double-take.

Read more »

chart reflected in eyeglass lenses
Energy Stocks

2 TSX Energy Stocks to Buy on Dips

These Canadian energy giants deserve to be on your radar.

Read more »