Inflation, interest rate fears, and geopolitical uncertainty have many investors looking for stability – and income. In this environment, high-yield dividend stocks are more than just attractive, but essential. And one Canadian stock, Parex Resources (TSX:PXT), is offering what many would call a rare gift in this market: a double-digit dividend yield and the financials to back it up. At today’s share price, this energy powerhouse is practically giving money away.
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The stock
Parex is an oil and gas producer focused exclusively on Colombia. While it may not have the brand recognition of the major Canadian players operating in Alberta, its operations are lean, focused, and highly profitable. And it’s that profitability that has allowed Parex to offer shareholders one of the most generous yields on the TSX. As of now, it pays a dividend of $1.54 per share, which translates to an annualized yield of about 11.9% based on its current share price of roughly $13.
What makes this even more compelling is that the dividend is backed by strong fundamentals. In its most recent earnings report, Parex posted net income of US$81 million in the first quarter of 2025. Earnings per share (EPS) came in at US$0.82, and funds flow from operations reached US$122 million, or US$1.24 per share. That puts the company on pace for close to US$5 in funds flow per share annually, a powerful signal that the dividend is sustainable, not just a flash in the pan.
Production numbers were also strong. In Q1 2025, Parex averaged 43,658 barrels of oil equivalent per day, staying within its 2025 guidance of 43,000 to 47,000 barrels of oil equivalent per day (boe/d). The energy firm also spent US$57 million in capital expenditures, which is on the low end for a company of its size. That leaves plenty of room to pay the dividend, fund buybacks, and reinvest in new projects. Its balance sheet remains solid, with zero debt and over US$200 million in cash as of the last report.
Value and income
The company’s share repurchase program is another feather in its cap. Parex has consistently bought back shares, reducing the number of outstanding shares over time. This not only signals management’s confidence in the stock but also boosts the value of remaining shares for long-term investors. Between the dividend and the buybacks, shareholders are getting a hefty return. Yet for some reason, the stock remains deeply undervalued. Its current price-to-earnings ratio is around 11.1, and its price-to-book ratio sits under 0.50. For a company that has no debt, gushes cash, and returns significant capital to shareholders, this is unusually cheap.
Why is it so cheap? Part of it comes down to geography. Some investors remain wary of companies that operate solely outside North America. But Colombia has proven to be a reliable jurisdiction for Parex. The country is a major oil exporter, and Parex has built strong relationships with the government and communities where it operates. The company has also diversified its operations across several fields and licenses, reducing political and operational risk.
So what does all this mean for investors? If you’re looking for a stock that delivers regular cash flow and has the potential for capital gains, too, Parex fits the bill. You’re getting a business with high margins, low capital requirements, a fortress balance sheet, and a yield that’s more than triple what you’d get from a 10-year government bond.
Bottom line
At today’s price, Parex isn’t just a high-yield stock. It’s a mis-priced gem. For anyone building an income-focused portfolio, this energy stock deserves a closer look. Because when a company is this profitable, this generous, and this overlooked, it really does feel like it’s giving away money.
