Irrespective of the inflation rate, energy stocks usually provide high returns if individuals stay invested for the long term. Given the current market sentiments, investors can consider buying such assets to ride through short-term price fluctuations and generate wealth over time. However, for this strategy to be successful, selecting the right company is critical.
In this regard, Cenovus Energy (TSX: CVE) is a top TSX stock which investors can buy. It is a Canadian international energy company which deals in the production, refining, transportation, and marketing of natural gas and crude oil.
Here are the reasons why investors should buy this stock.
Cenovus continues to churn out strong results
The Canadian integrated oil and gas company has surpassed analysts’ consensus estimates in its first-quarter (Q1) 2023 results. The company posted a quarterly earnings per share of US$0.24, surpassing the market’s expectations of US$0.22.
Cenovus’s quarterly reports also indicate a 9.09% earnings surprise. Furthermore, in the last four quarters, the company has twice surpassed earnings-per-share estimates. These factors are proof of Cenovus’s market-beating potential, which can be excellent for investors given the current scenario.
Quarterly dividends are on the rise
According to the company’s recent earnings results, the company’s dividend payout is on the rise. Cenovus Energy has announced a dividend payment of $0.14 per share. This represents a 33% increase from the last quarter, taking the stock’s dividend yield to 1.8%.
The dividend amount will be payable on June 30 to investors of record on June 14. If Cenovus can continue to grow its earnings as it has in the past, I suspect more dividend hikes will be on the horizon for investors.
Cenovus resumes production in Alberta
After the wildfires in Alberta, a lot of energy companies in the region had to temporarily shut down their operations in that region. However, reports earlier this month have indicated that Cenovus has successfully resumed its operations, generating approximately 62,000 boe/d.
This natural disaster also affected the company’s 85,000 boe/d production capacity at its Rainbow Lake site. An estimated production capacity of 20,000 boe/d has been affected, and given the wildfire situation in Canada this year, this is a material adverse factor investors are watching closely right now.
That said, I suspect any sort of impact will be short-lived in this regard. Long-term investors bullish on Cenovus may want to consider buying any associated dips on negative news right now.
Strong institutional ownership
Another reason many long-term investors are bullish on Cenovus is the strong institutional ownership of its stock. As of April, institutional investors owned more than half of the company. Given the knowledge, expertise, and size of these investors, individuals looking for safety in numbers (and smarts) will certainly like how this stock’s ownership base looks right now.
