Canadian energy investors are bracing for potential turbulence as new U.S. tariffs on Canadian oil imports loom in April 2025. In uncertain times, vertically integrated oil giants like Suncor Energy (TSX:SU) and Cenovus Energy (TSX:CVE) stand out – they control everything from production to refining, and what they lose to lower crude oil net prices they somewhat recover through better refining margins, softening the blow of oil price swings. But which oil stock is the better buy today? Let’s break it down.
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Suncor stock: The tariff shield with a fat dividend
Suncor is built like a fortress. About 60% to 65% of Suncor’s crude production stays within Canadian borders. With 79% of its 2025 refinery capacity in Canada (including key assets in Alberta and Quebec), it’s among the least exposed to U.S. tariffs. Only one of its four refineries sits south of the border (Colorado), and even there, it sources most crude locally. This setup means Suncor can keep its oil production and refining profits largely within Canada, and significantly dodge tariff risks that could slam peers.
Operationally, Suncor is firing on all cylinders. The company recently reported record upstream production (828,000 barrels/day in 2024) and refining utilization rates hitting 100% – a testament to its relentless focus on efficiency. Management slashed its breakeven oil price by $10/barrel last year, and the company needs a US$50 oil price (WTI) to fund dividends and growth. The West Texas Intermediate (WTI) oil price hovered above US$71 a barrel at writing.
Speaking of dividends, Suncor’s 4.2% yield (with a 46.7% payout ratio) is one of the sector’s juiciest and most covered – and it’s growing steadily at 3–5% annually. It’s a respectable passive income source.
But the real kicker? Share buybacks. Suncor retired about 3% of its shares in 2024 and plans to keep repurchasing stock aggressively now that net debt sits at a comfortable $8 billion. With a forward price-to-earnings (P/E) multiple of 9.8 and a price-earnings-to-growth (PEG) ratio of 0.9, Suncor stock looks undervalued if oil prices stabilize.
Suncor stock has generated about 8.2% in total returns year-to-date. SU offers stability during a tariff war, a high yield, and a management team hyper-focused on squeezing value from its integrated model.
Cenovus Energy stock: A growth play with a tariff tightrope
Cenovus is a different beast. While it boasts a 29-year resource life (longer than Suncor’s 26 years), 95% of its refinery capacity is in the U.S. This exposes it directly to tariffs – a risk reflected in its 10% year-to-date stock price decline. However, Cenovus could pass tariff costs to customers, thanks to its low operating costs and a US$45 WTI breakeven.
The company is doubling down on growth. Its West White Rose offshore project (targeting first oil by 2026) and Sunrise thermal expansion aim to boost production by 150,000 barrels/day by 2028. Meanwhile, downstream, Cenovus is clawing back refining margins after a tough 2024, targeting 70–75% market capture (up from 45%) as utilization improves.
Cenovus stock’s dividend yields 3.6%. Dividend hunters might prefer Suncor, but Cenovus is no slouch. It hiked its payout by 29% in 2024, and plans to return 100% of excess cash to shareholders via dividends and buybacks. The company has reduced its outstanding shares by 3% during the past year.
CVE stock spots a lower (cheaper) forward PE of 8.5. The energy stock has generated a negative 7.3% year-to-date total return. Cenovus stock is a bet on growth projects and refining recovery – but tariffs or prolonged weak cracks could delay its comeback.
Foolish bottom line
If you’re hedging against tariffs, Suncor stock is the clear choice. Its Canadian-heavy operations, reliable dividend, and buyback momentum make it a safer harbour. Cenovus stock appeals to growth-focused investors willing to stomach tariff risks for offshore and thermal oil upside. Both have merit, but in a storm, Suncor’s shields look sturdier.
