Investing in quality dividend stocks allows you to begin a low-cost passive-income stream. However, in addition to the dividend yield, it’s crucial to look at other financial metrics, such as the company’s debt level, payout ratio, and ability to grow these payouts over time.
One high-dividend TSX stock that offers shareholders an attractive dividend in May 2025 is Tourmaline Oil (TSX: TOU). In the last 10 years, TOU stock has returned 147% to shareholders in dividend-adjusted gains, easily outpacing peers and broader market returns.
In the last 12 months, the TSX dividend stock has paid $3.85 in cumulative dividends, translating to a forward yield of 6%. Let’s see if you should buy the Canadian energy giant for its attractive yield in May 2025.
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Is the TSX dividend stock a good buy?
Tourmaline Oil is a Canadian senior crude oil and natural gas exploration and production company that has established itself as a dominant force in the Western Canadian Sedimentary Basin since beginning operations in 2008. It has strategically built an extensive undeveloped land position through acquisitions, farm-ins, and land purchases, creating a large multi-year drilling inventory across three core growth areas.
Tourmaline’s operations are concentrated in three completely de-risked regions: the Alberta Deep Basin, Northeast British Columbia Montney, and the Peace River Triassic Oil Complex.
Tourmaline’s competitive advantage lies in its operational excellence and cost efficiency. The company operates the lowest-cost completed and stimulated horizontal wells across all three core complexes, with normalized drilling and completion costs per lateral foot below 2018 levels. This efficiency is supported by extensive midstream infrastructure, including 31 working interest gas plants and 18 wholly owned facilities and associated compression and pipeline networks.
Tourmaline’s integrated approach includes owning critical processing and transportation infrastructure, enabling control over operations from wellhead to market. Its transportation strategy ensures production stays on-stream while accessing diverse North American and international pricing hubs through major gas export pipelines.
A strong performance in Q1 of 2025
Tourmaline Oil delivered strong first-quarter (Q1) results with an average production of 638,000 BoE (barrels of oil equivalent) per day, up 8% year-over-year, generating $963 million in cash flow against $825 million in capital expenditures.
It reported $150 million in free cash flow while maintaining a disciplined approach to capital allocation and shareholder returns through a $0.35 special dividend and $0.50 quarterly dividend.
The quarter’s standout development was two strategic acquisitions in Northeast BC Montney totalling approximately $1 billion, adding 20,000 BoE per day of current production and 410 tier-one drilling locations.
These transactions, including the balance of Laprise-Conroy assets through Saguaro Resources and Greater Septimus area assets, strengthen Tourmaline’s position in one of North America’s most profitable gas plays while supporting the company’s multi-phase infrastructure buildout.
Tourmaline’s marketing strategy continued delivering superior pricing realization, achieving $4.30 per Mcf (million cubic feet) versus the AECO (Alberta Energy Company) benchmark of $2.19 per Mcf. The company maintains 2.1 Bcf per day of gas sales, insulated from local pricing volatility, with strong hedging positions through 2025.
What is the target price for Tourmaline Oil stock?
Tourmaline expects production volumes as high as 850,000 BoE per day by 2030, driven by the systematic development of its Northeast BC infrastructure, including four planned gas plants and associated liquids facilities.
The first plant comes online in late 2026, positioning the energy giant to capitalize on improving natural gas fundamentals and growing North American demand.
Given consensus price target estimates, Tourmaline Oil stock trades at a 20% discount in May 2025. After adjusting for its dividend, cumulative returns could be closer to 26%.
