Canadian Natural Resources (TSX:CNQ) stock has long been a favourite among investors seeking both passive income and capital growth in the energy sector. As we look ahead to 2025 and beyond, there are several compelling reasons why CNQ stock continues to stand out as an attractive investment option.
Canadian Natural Resources stock: A legacy built to last
One of Canadian Natural Resources’s most impressive features is its incredibly long reserve life index of 33 years. The $102 billion oil-producing company can maintain its current production rate for over three decades without depleting its reserves or needing to acquire new assets. It’s a testament to CNQ’s strategic planning and the quality of its resources, especially when compared to the peer average of just 17 years.
This long-life asset base isn’t just about longevity — it’s about stability and efficiency. CNQ’s Canadian oil sands operations require remarkably low maintenance capital, needing only about $8 per barrel compared to the $30 per barrel often required for shale wells. This efficiency translates into resilience, allowing CNQ stock to generate positive cash flow even when oil prices dip, with a break-even point of around US$40 per barrel — well below many competitors.
A dividend dynamo
For income-focused investors, CNQ’s dividend history is nothing short of impressive. With 24 consecutive years of dividend growth and a current yield of 4.3%, the Canadian Dividend Aristocrat is a reliable source of passive income. But it’s the recent growth rate during an oil super cycle that turns heads — an average of 30% over the past three years.
Investors who acquired CNQ stock at stock-split adjusted prices of around $17 a share five years ago could earn a staggering 12.4% dividend yield (on cost) this year and more passive income in 2025 and beyond.
Looking ahead, the oil company has made a bold commitment to distribute 100% of its free cash flow to shareholders after reaching its net debt target of $10 billion in 2023. While the spectacular dividend growth of recent years may moderate, analysts still project a respectable 3.1% raise for 2025.
CNQ stock positioned for growth
Canadian Natural Resources stock isn’t just about maintaining the status quo. The company is actively growing its production, with management forecasting a 4-5% increase for 2025. This growth, combined with CNQ’s efficient operations and strong balance sheet, positions the company well to capitalize on favourable market conditions.
Speaking of market conditions, several factors point to a potentially bullish outlook for oil prices. China’s economic recovery, ongoing geopolitical tensions, and a resilient global economy all contribute to a supportive environment for energy producers.
Geopolitical factors at play may support CNQ’s stock price
It’s important to note the current geopolitical landscape, particularly the concerning situation in the Middle East. While we hope for peaceful resolutions, the potential for conflict between Israel and Iran poses a real risk to global oil production. Any disruption to Iran’s energy industry could significantly impact global supply, potentially leading to higher oil prices. This uncertain environment underscores the value of stable, North American-based producers like Canadian Natural Resources stock.
An energy stock for the long haul
For investors with a long-term horizon, CNQ stock offers a unique proposition. Its 33-year reserve life index means that barring any major industry upheavals, an investment made today could theoretically be held for over three decades. This long-term potential, combined with the company’s commitment to shareholder returns and operational excellence, makes it an intriguing option for those looking to build lasting wealth through the energy sector.
While analysts project modest revenue and earnings growth in the near term (0.2% and 1% annually over the next two years, respectively), Canadian Natural Resources’s focus on efficiency, shareholder returns, and long-term sustainability paints a picture of a company built to weather various market conditions.
Dividend increases and sustained share-repurchase programs should continue to support positive investor returns over the long term.
Investor takeaway
Canadian Natural Resources stock presents a compelling case for long-term-oriented investors seeking a blend of current income, growth potential, and long-term stability in the energy sector. Its unique combination of long-life assets, strong dividend growth, and shareholder-friendly policies make it a stock worth serious consideration for those looking to energize their retirement portfolios.
