Although the TSX Composite Index is currently hovering close to its all-time highs, the possibility of markets turning volatile in the near term can’t be ruled out. From inflation jitters to renewed global trade tensions, macroeconomic headwinds continue to cast a shadow over investor sentiment. That’s exactly why it’s wise to anchor your portfolio with defensive, dividend-paying blue-chip stocks — especially when they’re trading at a discount.
In this article, let’s explore an undervalued Canadian blue-chip stock and why it could be a great choice for income investors.
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A reliable blue-chip stock in a turbulent market
A great example of such a stock right now is Canadian Natural Resources (TSX:CNQ), which has a perfect combination of a juicy dividend with long-term stability. It is one of the largest independent crude oil and natural gas producers in Canada, with operations across Western Canada, the North Sea, and Offshore Africa. The energy giant is well known for its long-life, low-decline oil sands and thermal assets, which help it deliver steady production even during rough patches.
CNQ stock is currently trading at $42.55 per share with a market cap of about $89.3 billion. Despite recent volatility, CNQ continues to offer an attractive annualized dividend yield of around 5.5%, paid quarterly. Over the past year, the stock has slid nearly 20%, making it a value buy for long-term investors.
Strong numbers despite the pullback
A mix of broader energy sector weakness and global uncertainty around oil prices could be two of the main reasons behind the recent pullback in CNQ stock. But when you dig into its actual numbers, they tell you a different story.
In the first quarter of 2025, Canadian Natural posted record-breaking daily production of over 1.58 million barrels of oil equivalent. Its liquids production hit 1.17 million barrels per day, the majority of which came from long-life, low-decline assets. During the quarter, the company’s adjusted earnings came in at $1.16 per share, while its adjusted funds flow hit $4.5 billion.
Interestingly, operating efficiencies are continuing to help Canadian Natural lower costs across its portfolio. For example, oil sands mining costs stood at just $21.88 per barrel last quarter, one of the best in the industry. At the same time, the company slashed net debt by $1.4 billion in a single quarter, proving that it’s managing its balance sheet responsibly while still returning capital to shareholders.
Why this Canadian stock is built for the long term
While many companies are still catching up, Canadian Natural is reducing its 2025 capital budget by $100 million without cutting back on production goals. Similarly, it also continues to invest in key growth areas like the Duvernay and Montney plays, which are already resulting in strong production and cost savings. Moreover, its high-value synthetic crude output and strong infrastructure are helping Canadian Natural generate a lot of free cash flow even at lower oil prices. That’s why, for anyone looking to add a top Canadian blue-chip stock to the portfolio while locking in a high yield, this energy giant is definitely worth considering.
