Could Suncor Stock Be a Big Winner in 2022?

Here’s why Suncor Energy (TSX:SU)(NYSE:SU) stock could be among the best investments for long-term investors in 2022.

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In the search for top Canadian value stocks, Suncor Energy (TSX:SU)(NYSE:SU) has been a real winner. Indeed, Suncor stock is up approximately 45% over the past year, buoyed by very strong performance over the past year.

What’s more, this recent performance looks to be a harbinger of what’s to come.

Crude oil prices soared 70% this past year. Perhaps oil price increases will slow this coming year or revert toward a longer-term mean. However, Suncor’s relative performance to the TSX suggests most investors remain highly bullish on this stock.

Here’s why I think 2022 could be another great year for Suncor stock.

Suncor stock to benefit from a doubling of its dividend

Supported by rising energy prices, Suncor’s top- and bottom-line performance this year has been incredible. This performance has driven expectations of future cash flow outperformance and demands from investors for more dividends and buybacks.

The company has listened.

Suncor recently announced plans to double the company’s dividend payout. This substantial move also coincides with plans for accelerated share buybacks. All in all, Suncor’s shareholder-friendly strategy appears to be playing out. As the company’s core energy exploration, refining and market, and oil sands businesses outperform, so do shareholders. Thus, those taking a long-term view of an energy stock to own have reason to like Suncor stock right now.

Higher production and capital expenditures in the cards for 2022

With energy prices remaining elevated, companies like Suncor are in the driver’s seat. Capital expenditure growth alongside share buyback and dividend increases haven’t taken place in quite some time. What a difference $80 oil can make.

Corporate guidance for 2022 suggests Suncor will be able to meet its previous obligations, and then some. This guidance reflects continued cost and capital discipline, with strong operational performance across every segment. Suncor’s outlook for its core business remains strong, and Suncor company is set out to enhance shareholder value.

There’s a lot to like about how Suncor is positioned right now.

Bottom line

Suncor’s recent performance is noteworthy, and rewards those who believe in the long-term necessity of the energy sector. Indeed, Suncor is a key player in Canada’s energy sector. As energy prices continue to remain in focus, there are strong catalysts behind this stock.

The company’s solid results this past year are likely to continue into 2022, in this environment. Those looking for value will note that Suncor stock still trades around 21 times earnings. That’s after investors have digested these near-term catalysts.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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