The search for top dividend stocks to invest in can certainly feel like a daunting task. However, for those looking for high-yield oil stocks, the good news is that there are some top options to consider on the TSX which I think can provide returns similar to (or better than ) Exxon Mobil (NYSE: XOM) and other top oil and gas players in the U.S.
The Canadian energy sector is massive, with a range of companies operating everything from oil sands fields to pipelines. But for those bullish on the energy independence movement in North America, these are the companies I’d look at first to generate meaningful returns over the long term.
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Suncor Energy
Suncor Energy (TSX: SU) has been among my top picks for pure oil production in Canada for a long time. This Alberta-based energy company has extensive and integrated operations, engaging in everything from oil sands development and exploration to the production, refining, and marketing of petroleum products. The company also trades energy commodities and operates gas stations and convenience stores.
A unique specialty of Suncor Energy is its end-to-end business model, which engages in multiple processes to minimize operations costs. This provides the energy company with a diversified revenue stream, allowing it to stabilize earnings and mitigate risks. Additionally, the company maintains a reserve of more than 7 million barrels of crude oil to ensure reliable supply.
As of June 30, 2024, Suncor Energy brought in $3.4 billion in adjusted funds from operations, up from $2.6 billion in the same quarter of the previous year. Meanwhile, the company has managed to reduce its debt, from $11.1 billion in Q2 FY24 to $9.05 billion this year. So long as these trends continue, I think the stock chart above will be reflective of where this company could be headed from here.
Canadian Natural Resources
Canadian Natural Resources Limited (TSX: CNQ) is one of the top independent oil and gas producers in Canada. Headquartered in Calgary, CNQ provides a diversified portfolio of oil-producing assets in Western Canada and offshore assets in the North Sea, Ivory Coast, and Gabon. Canadian Natural Resources has the biggest undeveloped base in the Western Canada Sedimentary Basin.
The company owns an unmatched asset base, with a diversified portfolio of high-quality crude oil, natural gas, and other assets with a reserve life index of 44 years. Its massive proven reserves make the company a safe long-term bet. Moreover, CNQ has been steadily increasing its production, with management forecasting 4–5% growth for 2025.
I think these growth estimates could actually be light, and I’ll be paying close attention to how the numbers roll in. But certainly, this is a top energy stock I think long-term investors want to own right now.
Enbridge
Enbridge (TSX: ENB) is a multinational crude oil and natural gas pipeline company. Enbridge operates the largest and most complex oil and liquid transportation system in the world, with around 29,104 km (18,095 miles) of active pipeline across North America. The company is responsible for transporting the largest volumes of natural gas and crude oil across North America, contributing to 20% and 30% of the total share.
Enbridge’s unique strategic position and significance make it a very effective defensive stock. Most of its cash flows come from fees and contractual agreements, which are fixed and reliable. The company is also innovative for moving on with the times, as it is making a transition to owning more natural gas resources. Furthermore, it’s a high dividend-yield stock, with a current yield of 6.6% – that’s actually down considerably of late due to its rise, if you can believe that. In other words, investors who locked in a much higher yield are seeing the benefits of those distributions relative to their cost basis, while also benefiting from capital appreciation.
I think these dynamics can continue for some time. Thus, this is a great company to round out this list of top Canadian high-yield oil stocks to buy in my view.
