Suncor Energy (TSX:SU) is one of the largest companies in Canada that has delivered steady returns to shareholders in the past two decades. Valued at $63.3 billion by market cap, Suncor Energy stock has surged 168% to shareholders since March 2004. After adjusting for dividends total returns are closer to 330%. In this period, the TSX index has returned 372%.
Despite a challenging macro environment in 2023, Suncor reported adjusted funds from operations of $4 billion, or $3.12 per share. Comparatively, adjusted operating earnings stood at $1.6 billion, or $1.26 per share, allowing the company to return $1.1 billion to shareholders in the fourth quarter (Q4) of 2023, including $704 million in dividends.
In 2023, Suncor repurchased shares worth $2.2 billion, which was almost 4% of its float. It ended 2023 with a net debt of $13.7 billion, reflecting the closing of the acquisition of Total Energy Canada for $1.5 billion.
Suncor Energy stock currently pays an annual dividend of $2.18 per share, translating to a forward yield of 4.4%. These payouts have risen by 13.8% annually in the last 13 years, which is exceptional for an energy stock.
Priced at 10 times forward earnings, Suncor stock is cheap and trades at a discount of 5% to consensus price target estimates. While investing in Suncor might seem enticing due to its tasty dividend yield, here’s another TSX stock that offers you a higher payout.
Is Whitecap Resources a good stock to buy?
Valued at $6 billion by market cap, Whitecap Resources (TSX:WCP) focuses on the acquisition, development, and production of oil and gas assets in Western Canada. Whitecap emphasized the development of its high-quality drilling inventory has yielded exceptional results as it continues to improve capital efficiencies and netbacks for increased profitability.
In 2023, it generated funds flow of $1.8 billion and invested $954 million in capital expenditures. It ended the year with a free cash flow of $838 million, or $1.38 per share. Comparatively, it paid dividends worth $373 million, or $0.62 per share, indicating a payout ratio of less than 50%. A low payout ratio allows Whitecap to target acquisitions, lower balance sheet debt, and raise dividends further.
In 2024, the company has increased dividends to $0.73 per share, indicating a forward yield of 7.2%, which is very attractive. In fact, Whitecap has increased dividends for the seventh time in three years. In the last 11 years, it has paid $1.8 billion in cumulative dividends while allocating $612 million towards buybacks since 2017.
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Whitecap ended 2023 with a net debt of $1.4 billion, indicating a debt-to-EBITDA ratio of 0.7 times, which is within the company’s debt covenants. Priced at 8.9 times forward earnings, Whitecap stock is very cheap and trades at a discount of 21% to consensus price target estimates.
The Foolish takeaway
Investors can consider adding Suncor and Whitecap to their energy stocks watchlists in 2024. Both of these companies trade at a reasonable valuation and offer a tasty yield, making them attractive to income and value investors.
