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TFSA Investor Alert: Buy This Contrarian Dividend Stock Today for a 4% Yield

Contrarian TFSA investors  looking for a reliable dividend stock with big upside should consider Canadian Natural Resources Ltd. (TSX:CNQ)(NYSE:CNQ) stock.

A great company in a not-so-great industry (for now?)

Earlier this month, Canadian Natural reported third quarter 2019 results that once again served to remind investors of the great company story behind the constant negative industry story that has plagued the oil and gas industry and its constituents, particularly the Canadian oil and gas industry.

This contrarian stock has a quite a few things going for it, and I would like to remind investors that the only reason Canadian Natural Resources stock is a contrarian stock is because of the industry in which it operates.

Company-specific variables are what the company has control over and these variables are top notch over at CNQ.

As is the case with Canadian Natural, this dynamic often creates opportunities to buy quality companies at value prices. Let’s look at what these variables are.

A top tier company operationally and financially

With a diversified portfolio of oil and gas assets in North America, the U.K. North Sea, and Offshore Africa, Canadian Natural Resources is one of Canada’s largest independent producers.

The company owns long-life, low decline assets that provide sustainable and predictable cash flow, and it has in its portfolio significant development opportunities and a large undeveloped land base.

Despite all the negative headlines and the real issues in the Canadian oil and gas industry today, however, Canadian Natural has continued to post impressive results that highlight the strength of the company, its management team, and its operational know-how.

In its most recent quarter, corporate operating costs declined 11% as the company continued to press hard on cost control and improving the effectiveness and efficiency of its operations.

Oil sands mining and upgrading assets saw a 12% reduction in operating costs to $20.05 per barrel.  Costs at oil sands operations have come down big over the years, which is testament to the improvements that the company has initiated and successfully implemented.

Canadian Natural’s acquisition of Devon Energy’s Canadian assets in Western Canada is an example of the type of value creation that Canadian Natural’s strong position affords it.

The acquisition is right in CNQ’s core areas in Western Alberta, will add 128,300 barrels a day of production while providing the opportunity to achieve $135 million in synergies (annualized).

An attractive dividend yield for TFSA tax-free income

Canadian Natural’s 4% dividend yield is backed by massive amounts of cash flow, and a stability and consistency that investors may not think about when they think about oil and gas companies.

In fact, Canadian Natural has increased its dividend for 19 consecutive years, has never cut its dividend, and continues to generate impressive cash flows.

In the third quarter, the company generated approximately $2.5 billion in operating cash flow, and in the first nine months of the year, the company generated approximately $6.4 billion in operating cash flow.

Foolish bottom line

Canadian Natural Resources stock currently trades at a dividend yield of 4% at writing, a very attractive yield for TFSA income-seeking investors.

It’s a stock that has suffered due to the very difficult oil and gas industry, but the company’s financial results have remained quite healthy, creating an attractive contrarian buy scenario for Canadian Natural Resources stock today.

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Fool contributor Karen Thomas owns shares of Canadian Natural Resources and CDN NATURAL RES.

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