Canadian Natural Resources (TSX:CNQ) has recovered most of its losses from the April plunge, but the stock is still down more than 20% from its 2024 high. Investors who missed the rally over the past three months are wondering if CNQ stock remains undervalued and is good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and total returns.
Canadian Natural Resources share price
CNRL trades near $43 per share at the time of writing. This is up from $36 in April, but is well below the $55 it reached last year.
Falling oil prices are largely to blame for the weakness in the share price over the past 15 months. West Texas Intermediate (WTI) oil trades near US$68 per barrel right now. That’s up from US$57 in May, but still off the US$80 it fetched in 2024.
Aside from a few short-term spikes caused by geopolitical risks, oil has actually trended lower over the past two years. Weak demand in China due to a struggling economy has combined with supply growth from non-OPEC countries, including Canada and the United States, to put pressure on oil prices.
In 2025, oil traders are focused on trade wars. A recession in the United States and further economic weakness in China could be on the way if high U.S. tariffs stay in place for too long. This would put pressure on oil demand in the two largest oil markets. At the same time, OPEC is planning to increase supply in an effort to win back market share. Analysts broadly expect the oil market to remain in a surplus position through 2026. That would be a headwind for oil prices.
CNRL operations and financials
CNRL continues to deliver strong financial results, even in the challenging market conditions. The company reported adjusted net earnings of $2.4 billion in the first quarter (Q1) of 2025 compared to $1.5 billion in the same period last year.
The company grows through strategic acquisitions, including US$6.5 billion spent in 2024 to buy the Canadian assets of Chevron. This deal added significant production and reserves to the existing portfolio. CNRL benefits from its diversified asset base that includes oil sands, conventional heavy oil, conventional light oil, offshore oil, natural gas liquids, and natural gas properties. The company is adept at moving capital around the portfolio to take advantage of movements in commodity prices. The natural gas business, for example, is benefiting from higher prices in 2025. This provides a good hedge against weakness on the oil side.
CNRL’s strong balance sheet and diversified assets are the reason the board has been able to raise the dividend for 25 consecutive years. CNRL already increased the distribution in 2025, following two dividend hikes in 2024. Investors who buy CNQ stock at the current level can get a dividend yield of 5.4%. This is attractive for income investors and pays those seeking long-term total returns a decent yield to ride out turbulence in the share price.
Opportunity
The Coastal GasLink natural gas pipeline that connects to the new LNG Canada export facility provides Canadian natural gas producers with access to international markets. Additional LNG export facilities on the coast of British Columbia will be completed in the coming years. This is expected to raise the price for natural gas that producers can receive. Currently, almost all of Canada’s natural gas exports go to the United States at a price that is much lower than international pricing.
This is also true for oil. CNRL and its peers now have access to international markets through the Trans Mountain expansion that went into service in 2024. A new oil pipeline to the coast of British Columbia could be in the works as Canada looks to pivot away from its reliance on the United States. New pipeline infrastructure for both oil and natural gas would benefit CNRL in the coming years.
Time to buy?
Near-term volatility should be expected in the oil market, but CNRL looks attractive at the current price and pays a solid dividend that should continue to grow. If you have some cash to put to work, this stock deserves to be on your radar.
