When talk of a recession begins to bubble up again, it’s natural for investors to get a little nervous. But instead of retreating, this is often the best time to refine a portfolio and make sure it’s packed with companies that can withstand economic pressure. That’s where dividend-paying energy stocks come into play. And one in particular, Peyto Exploration & Development (TSX:PEY), stands out right now. It holds a dividend yield hovering around 7%, strong financials, and a low-cost natural gas operation. Therefore, Peyto checks a lot of boxes for investors looking for stability, income, and long-term value in one place.
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The stock
Peyto is based in Calgary and has long been one of the lowest-cost natural gas producers in the country. It operates primarily in Alberta’s Deep Basin and focuses on finding efficiencies wherever it can. In an industry known for boom and bust cycles, Peyto’s approach has allowed it to stay profitable even when gas prices are under pressure. That kind of resilience is exactly what you want when you’re building a recession-resistant portfolio.
In the company’s most recent quarterly results, Peyto reported net income of $114.1 million, or $0.57 per share. Revenue came in at $347.3 million, a 38% increase from the same quarter last year. The company also saw production rise to 107,000 barrels of oil equivalent per day, up from 102,000 last year. More importantly, Peyto reaffirmed its commitment to returning value to shareholders with a steady $0.11 monthly dividend per share, which works out to $1.32 annually.
That payout is supported by a solid balance sheet and an operating model that prioritizes cost control. Peyto’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of over 62% is proof that the business is highly efficient, especially compared to other energy companies of similar size. This margin strength gives the company flexibility. Flexibility to reinvest in growth, pay down debt, or simply keep sending those dividend cheques every month. And when uncertainty is swirling around, predictability is everything.
More to come
Another reason Peyto stands out is its recent acquisition of Repsol Canada’s assets in 2023. That deal added valuable infrastructure and boosted production capacity significantly. It also gave Peyto more processing capability, which reduced its reliance on third parties and helped keep costs even lower. The company has since been focused on integrating those assets while maintaining its strong financial footing. So far, it looks like that strategy is working well.
Now, there’s always some risk in the energy sector, especially when commodity prices are involved. Natural gas can be volatile, and demand can shift depending on the season and the economy. But what makes Peyto a compelling pick in this space is that it doesn’t need sky-high gas prices to turn a profit. Its breakeven point is well below many of its peers, giving it a cushion during downturns. That’s what makes it recession-resistant: it doesn’t rely on boom times to stay afloat.
Bottom line
So, how would it fit into a broader recession-resistant portfolio? You might think of Peyto as the income engine. While you balance it with defensive sectors like utilities or consumer staples, Peyto can provide strong monthly cash flow. In short, Peyto offers something rare: a high dividend yield from a company with a history of operational discipline and growth-minded acquisitions. Furthermore, a commodity that still plays a role in the global energy future. In an uncertain economy, those are traits that can make a world of difference. That’s why Peyto is firmly on the list as a top stock to add to a recession-resistant portfolio in 2025 and beyond.
