The trade war has driven oil prices lower in 2025 as investors worry about a possible global recession and slowing consumer demand. The decline in oil prices has also lowered the valuations of several blue-chip oil stocks, such as Canadian Natural Resources (TSX: CNQ), allowing you to buy the dip and benefit from outsized gains when market sentiment recovers.
CNQ stock is down 30% from all-time highs and currently offers you a tasty dividend yield of 5.4%. In the last 30 years, the TSX stock has returned 5,300% to shareholders. Moreover, if we adjust for dividend reinvestments, cumulative returns are closer to 9,760%.
So, a $1,000 investment in CNQ stock in January 1995 would be worth nearly $99,000 today, which shows the power of compounding. Let’s see why CNQ remains a top buy in April 2025.
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Is this TSX stock a good buy right now?
Earlier this year, Canadian Natural Resources unveiled an ambitious 2025 budget, projecting production growth fueled by recent acquisitions and operational efficiencies across its diverse asset portfolio.
It announced a 2025 production guidance range of 1.510 million and 1.555 million BoE/d (barrels of oil equivalent per day), representing approximately 12% growth from 2024 levels. On a per-share basis, production growth is expected to be even stronger at 14% (at the midpoint estimate), reflecting the company’s ongoing share-repurchase program.
“We are in an enviable position with low maintenance capital and top-tier high-value opportunities to execute in the near term while setting up for the future,” said Scott Stauth, president of Canadian Natural, during the company’s budget conference call.
The $6 billion operating budget allocates approximately $3.2 billion to conventional exploration and production, while $2.185 billion is earmarked for the company’s long-life, low-decline thermal and oil sands mining and upgrading assets. It also plans to invest $90 million in carbon capture projects.
Canadian Natural highlighted that its acquisition of Chevron assets contributes approximately 120,000 BoE/d to production growth, with an additional 30,000 BoE/d expected from a pending acquisition slated for the first quarter.
CNQ’s low corporate decline rate of approximately 11% remains a key competitive advantage, requiring less maintenance capital to sustain production. Moreover, maintenance capital is estimated at $8-9 per BoE.
“Our unique asset base has low maintenance capital compared to a typical E&P company and facilitates maximizing free cash flow in 2025,” said Mark Stainthorpe, chief financial officer.
What is the target price for the TSX dividend stock?
Canadian Natural emphasized its balanced product mix, with approximately 47% of production consisting of high-value synthetic crude oil, light crude oil, and NGLs (natural gas liquids), followed by natural gas at 27% and heavy oil at 26%.
CNQ recently increased its quarterly dividend to $0.5625 per share, marking 25 consecutive years of dividend increases with a compound annual growth rate of 21% over that period.
Despite its massive size, CNQ is forecast to increase its adjusted earnings per share from $3.46 in 2024 to $7.60 in 2029. During this period, its dividend per share is projected to grow from $2.13 to $3 per share.
Analysts remain bullish on the TSX dividend stock and expect it to gain 29% over the next year, based on consensus price targets. If we include dividends, cumulative returns could be closer to 35%.
