The energy patch has been a rather turbulent place to invest over the past three years. Undoubtedly, oil price volatility and other macro headwinds have made the broad batch that much tougher to place a bet in. Still, the high-quality blue-chip energy plays (think the kings of the Albertan oil patch) have continued to pay handsome dividends. And as the cash flows keep pouring in, it’s the long-term shareholders who are likely to be on the receiving end of more consistent dividend hikes.
Shares of Canadian Natural Resources (TSX:CNQ) have been under quite a bit of pressure over the past year and a half. The stock has bounced off 52-week lows following a correction that saw the stock shed nearly a third of its value, but still down 21%, the bear seems to be in control. In any case, I think the main star of the show has to be that 5.5% dividend yield.
Canadian Natural Resources’s dividend isn’t just sizeable, it’s subject to grow a great deal over time
It’s not only a secure payout, but one that could be subject to above-average growth from here, even if energy prices were to stay in a spot that’s less than ideal. The company has done a great job of chipping away at its debt pile, most recently paying off a whopping $1.4 billion worth of debt in the first quarter of 2025.
Indeed, less debt weighing on the company’s shoulders means greater financial flexibility to pursue growth projects and, of course, efforts to return more cash into the pockets of shareholders, either through more (or perhaps more sizeable) dividend increases and share buybacks. Most recently, the company increased its already generous payout by 4%. That’s a respectable hike, especially given the current pressures facing the broad energy industry.
And while it’s tough to tell which direction oil prices will head next, given the conflict in the Middle East and the complicated matter of Trump’s tariffs, I do think that the well-run operator continues to be a stellar investment, especially at today’s relatively depressed multiples at around $43 per share. The company’s management team can adjust accordingly even if oil prices were to stay a tad lower for lower. Indeed, Canadian Natural has made it through environments where oil prices have been low before. And it was a wise move for investors to buy the stock despite worries of a so-called “lower for longer” kind of energy price climate.
The energy patch may face continued headwinds. But Canadian Natural can weather such a storm better than most
At these depths, shares of CNQ trade for 12.3 times trailing price to earnings (P/E). That’s not at all a high price to pay for one of the best large-cap energy producers in the country. And while it could take some time for the firm to feel the tailwinds at its back again, I think the fat dividend is enough reason to stick with the name as it stages a comeback from its bearish correction. Going into the second half, I wouldn’t bet against the stock, even if there’s still more tariff downside ahead for markets.
