If You Like Cenovus Energy, Then You’ll Love These High-Yield Oil Stocks

Cenovus Energy is a standout performer in 2024, but two high-yield oil stocks could attract more income-focused investors.

| More on:
Group of industrial workers in a refinery - oil processing equipment and machinery

Image source: Getty Images

The energy sector is getting most of the attention in 2024. As of this writing, the top-performing sector is ahead year to date (+21.44%). One of the standout performers thus far is Cenovus Energy (TSX:CVE). The growth outlook for the $52.9 billion integrated oil & natural gas company is bright.

However, if the dividend is your primary consideration, another large-cap stock and a small-cap energy constituent have higher yields than Cenovus Energy.

Outperformer, modest dividends

Cenovus Energy’s surging production level in the fourth quarter (Q4) of 2023 and future production volume shows in the stock’s performance. In three months ending December 31, 2023, the 808,600 barrels of oil equivalent per day (boe/d) was its second-highest quarterly production ever.

However, for the full-year 2023, net earnings dropped 36.3% year over year to $4.1 billion. Still, expect Canada’s third-largest oil producer to boost production by 19% over the next five years.

When the expansion of the government-owned Trans Mountain pipeline is complete in Q2 2024, Cenovus will benefit from and have increased export pipeline capacity. At $28.52 per share, CVE is up 29.9% year to date but pays the 1.98% dividend is modest compared to two high-yield oil stocks.

Dividend Aristocrat 

TC Energy (TSX:TRP) is down 4.43% year to date, but it doesn’t mean the payouts are in jeopardy. The $51.46 billion energy infrastructure company is a Dividend Aristocrat owing to 24 consecutive years of dividend increases.

Cenovus Energy suspended dividend payments in 2020 due to weak oil prices and the global pandemic. If you invest in TRP today, the share price is $48.60, while the dividend yield is 7.74%.

Management credits the high-quality asset base for the solid financial results in Q4 and full year 2023. In the three months ending December 31, 2023, net income reached $1.46 billion compared to the $1.45 billion net loss in Q4 2022. For 2023, net income soared 341.3% year over year to $2.83 billion.

TC Energy is ready to enter a transformative period with the spinoff of its liquids pipeline business and the creation of South Bow. TC Energy will maintain its regulated, low-risk, utility-like portfolio of natural gas and power businesses, while South Bow will assume the liquids transportation and storage business.

Shareholders will vote on the spinoff transaction by mid-year 2024, and it should be completed by the second half of the year. The standalone entities can pursue growth opportunities and meet demands in their respective markets.

Monthly dividends

Cardinal Energy (TSX:CJ) continues to outperform the broader market. At $6.89 per share (+12.68% year to date), the small-cap stock pays a mouth-watering 10.36% dividend. But unlike Cenovus Energy and TC Energy, the payout frequency is monthly, not quarterly. It hasn’t missed a monthly payment since February 2014.

The $1.1 billion oil and natural gas company operates in Western Canada and focuses on low-decline oil. In 2023, petroleum and gas revenue declined 20% to $589.6 million versus 2022, while earnings fell 65.77% year over year to $103.6 million.

Management said its cornerstone Reford SAGD (steam-assisted gravity drainage) project is under development. Its sanctioning will extend the reserve base and decline profile and provide 20 or more years of incremental adjusted funds flow.

Higher payouts

TC Energy and Cardinal Energy’s dividend offers are exceedingly higher than Cenovus Energy’s. Your choice would likely depend on risk tolerance and investment budget.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Energy Stocks

Oil pumps against sunset
Energy Stocks

A Dividend Giant I’d Buy Over Suncor Energy Stock

Suncor Energy stock has crushed the broader markets in the last 20 years. But this TSX energy stock has beaten…

Read more »

oil tank at night
Energy Stocks

2 Incredibly Cheap Energy Stocks to Buy Now

Two cheap energy stocks are the best deals in TSX’s top-performing sector in 2024.

Read more »

grow dividends
Energy Stocks

Growth Spurt: 2 TSX Stocks Set to Skyrocket

Two growth stocks in expanding, niche markets are set to skyrocket further in 2024 and beyond.

Read more »

Nuclear power station cooling tower
Energy Stocks

Why Shares of Cameco Are Powering Higher

Cameco (TSX:CCO) shares have surged more than 400% in the last five years alone, with more growth on the way.

Read more »

stock analysis
Energy Stocks

Is Enbridge Stock a Good Buy in May 2024?

Boasting high-yielding dividends and a stable underlying business, Enbridge (TSX:ENB) might be a great buy for your self-directed investment portfolio…

Read more »

You Should Know This
Energy Stocks

Brookfield Infrastructure Is Up 9% After Earnings: What Investors Need to Know

A large-cap stock with a low-risk and strong revenue profile is an investment opportunity for income, growth, or both.

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

2 No-Brainer Energy Stocks to Buy Right Now for Less Than $500

Here are two rallying Canadian energy stocks you can buy today with attractive dividend yields and growth potential.

Read more »

edit Businessman using calculator next to laptop
Energy Stocks

Could This Undervalued Stock Make You a Millionaire One Day?

It's been a long wait, but Ballard Power finally seems to be gaining the kind of momentum that's game changing.

Read more »