High-quality Canadian dividend stocks are top investment options to generate steady passive income. Notably, the TSX has several stocks that have paid and increased dividends for decades. However, here I’ll focus on a Canadian stock that is down about 24.8% from its 52-week high.
While it has lost significant value, its fundamentals remain solid. It continues to enhance its shareholder value through higher distributions and offers a decent yield. Further, it will likely increase its dividend at a solid pace in the coming years.
Against this background, here’s one magnificent Canadian dividend stock to buy and hold forever.
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The magnificent Canadian dividend stock
Among the dependable investment options, energy giant Canadian Natural Resources (TSX:CNQ) is a compelling stock to buy and hold forever. Its solid financials, impressive dividend payment and growth history, sustainable payouts, and attractive yield make it a top stock for income investors.
Canadian Natural Resources returned substantial cash to its shareholders in 2024 through two dividend increases and share repurchases. Notably, in October 2024, Canadian Natural Resources announced a quarterly dividend hike to $0.5625 per share. Including the recent rise, Canadian Natural Resources has raised its dividend for 25 consecutive years. Further, the company’s dividend sports a compound annual growth rate (CAGR) of 21% during this period.
The company’s high-quality assets, strong financial performance, and disciplined capital allocation suggest its dividend growth trajectory remains intact. Moreover, Canadian Natural Resources offers a dividend yield of approximately 4.9% based on its closing price of $42.67 on February 15.
Canadian Natural to increase the dividend
Canadian Natural Resources is set to reward investors with a dividend increase fueled by strong production growth and its high-quality assets. With a solid capital budget of approximately $6 billion for 2025, the company expects to boost annual production by about 12% year over year. Strategic acquisitions, including the Athabasca Oil Sands Project (AOSP) and Duvernay assets, will play a key role in driving this expansion.
The company’s diversified production mix ensures stability, balancing output across light, synthetic, and heavy oil, as well as natural gas liquids and natural gas. This approach provides flexibility for capital investments, maximizing value for shareholders.
Canadian Natural Resources will also benefit from its long-life, low-decline assets, which made up about 79% of its total liquids production in 2024. A significant portion of this production comes from its zero-decline, high-value synthetic crude oil operations. This asset base ensures steady cash flow, even in volatile commodity markets, while keeping reserve replacement costs low.
Canadian Natural Resources also holds a substantial inventory of low-capital projects, which can be swiftly executed in favourable market conditions to generate strong returns. Further, its vast undeveloped land base supports large-scale, repeatable drilling programs, enhancing efficiency and profitability.
In summary, Canadian Natural Resources’s solid asset base, strong balance sheet, strategic acquisitions, and efficient operations provide competitive advantages and enable the company to enhance its shareholder value through consistent dividend growth and share buybacks. Its solid dividend distribution history and focus on returning significant cash to its shareholders make it a top income stock to buy and hold forever.
