Suncor Energy (TSX:SU) remains a key player in the energy sector of Canada, operating as an integrated energy company with a strong focus on oil sands development, refining, and renewable energy initiatives.
As we look at the prospects of the company for 2025, investors are faced with the crucial question: Is this a top Canadian energy stock worth buying, selling or holding this year?
Here’s why I’m taking the bullish angle on Suncor, at least for now.
Strong fundamentals
Suncor Energy has faced a turbulent few years. However, as of early 2025, the company appears to be on more stable ground. The rebound in global oil prices has significantly bolstered revenue, with crude oil trading above $80 per barrel. Suncor has streamlined its operations, focusing on cost control and optimizing production efficiency.
The company has reinstated and increased its dividend payouts, signalling confidence in its financial stability. Despite these improvements, challenges remain, including environmental scrutiny, competition from renewable energy sources, and geopolitical uncertainties.
Oil prices play a pivotal role in the profitability of Suncor. The outlook for 2025 suggests steady demand for fossil fuels, supported by recovering global economies and constrained supply due to underinvestment in upstream oil projects. However, the push for renewable energy and potential economic slowdowns could dampen demand.
Financial performance remains on track
The recent quarterly results of Suncor showed a strong recovery. A double-digit increase year-over-year due to higher production volumes and favourable pricing. Suncor has aggressively reduced its debt, strengthening its balance sheet. Moreover, improved cash flow has allowed for share buybacks and dividend hikes, enhancing shareholder returns. Investors should keep an eye on future earnings reports to assess whether this momentum is sustainable.
Suncor is known for its attractive dividend yield, which currently stands at approximately 4%. This makes it a compelling choice for income-focused investors. The company’s ability to maintain and grow dividends in a volatile environment reflects its commitment to shareholder value.
As the world shifts towards greener energy, Suncor faces increasing pressure to adapt. The company has made strides in investing in renewable energy projects such as wind and hydrogen. Moreover, it has reduced greenhouse gas emissions through operational improvements, partnered with indigenous communities, and focused on sustainability. While these efforts are commendable, they come with high costs and uncertain returns, potentially impacting short-term profitability.
Suncor looks like a buy
Investors who believe that oil prices will continue to be sustained and recover from here can certainly consider Suncor at current levels. After all, this is a company that provides steady income through dividends, as well as value exposure to a leading player in Canada’s energy sector. This investment could provide long-term benefits as the market stabilizes.
Alternatively, many investors may consider holding the stock if you are satisfied with its dividend yield and anticipate moderate growth without excessive risk. However, those considering selling Suncor may only do so if other more appropriate investments can be found that fit one’s investor profile to a greater degree. For those seeking higher growth or dividend yield, there are other options out there – it really depends on one’s profile.
Overall, Suncor Energy has demonstrated resilience and adaptability, positioning this company as a cornerstone of Canada’s energy sector. With a history of strong dividend payouts, disciplined financial management, and strategic investments in both traditional and renewable energy, the company offers long-term value for investors. The current global oil market dynamics, coupled with Suncor’s operational improvements, make it an attractive option for those seeking steady income and moderate growth.
