Canadian Natural Resources (TSX:CNQ) saw its share price take a hit over the past year as oil prices fell from their 2024 highs. Investors who missed the bounce off the April low are wondering if CNQ stock is still undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) focused on dividends and total returns.
Canadian Natural Resources stock price
CNRL trades near $43 per share at the time of writing. The stock is down from a high around $55 last year. It slipped as low as $35 during the market rout a few months ago.
CNRL is a giant in the Canadian energy patch. The company owns a diversified portfolio of assets, including oil sands, conventional heavy oil, conventional light oil, offshore oil, natural gas liquids, and natural gas production and reserves.
CNRL is typically the sole owner or majority owner of its businesses. This gives management the flexibility to quickly move capital around the portfolio to take advantage of positive shifts in commodity prices. In addition, CNRL’s size and strong balance sheet enable the company to make large strategic acquisitions at opportune times to boost earnings and reserves. For example, the company spent US$6.5 billion in 2024 to buy the Canadian assets owned by Chevron.
CNRL says its breakeven West Texas Intermediate (WTI) oil price is around US$40 to US$45 per barrel. At the time of writing, WTI trades near US$66 per barrel. That’s down from more than US$80 last year, but still at a level where CNRL can generate decent margins. The large natural gas division provides a good hedge against lower oil prices. Natural gas prices are higher in 2025 than they were through most of the past two years.
Oil market outlook
Aside from brief spikes due to geopolitical events, the price of oil has trended lower over the past year. This is due to weak demand from China and concerns that tariffs imposed by the United States will lead to a recession in the American and global economies. At the same time, OPEC intends to increase supply to regain lost market share. Non-OPEC producers, including Canada and the United States, are also increasing production.
As such, analysts widely expect oil prices to remain under pressure through the rest of 2025 and into 2026. That being said, a major geopolitical disruption in the Middle East or an announcement of a concrete trade deal between the U.S. and China could push oil prices higher as traders adjust demand and supply expectations.
Dividends
CNRL raised its dividend in each of the past 25 years. This is a great track record for a business that relies on commodity prices to determine its margins. Investors who buy CNQ stock at the current level can get a dividend yield of 5.5%.
The company continues to generate solid earnings through increased production from acquisitions and the drilling program. This should support ongoing dividend growth.
Time to buy?
Near-term volatility is expected and the stock could easily retest the 2025 low if trade negotiations between the U.S. and its largest trading partners go off the rails. That being said, dividend investors might want to start nibbling on the stock at this price point and look to add to the position on further weakness. At the current yield, you get paid well to ride out some turbulence.
