Investing in high-quality stocks that offer a steady dividend payout each month is a low-cost way to establish a passive-income stream. Canadian investors should identify companies that have a sustainable payout ratio and the ability to grow earnings, cash flows, and dividends over time.
In this article, I analyze a TSX dividend stock that offers a monthly payout and a forward yield of nearly 7% to shareholders as of July 2025. Valued at a market cap of $13 billion, Whitecap Resources (TSX:WCP) is an oil and gas company focused on improving long-term sustainability and profitability through disciplined capital allocation and balance sheet management.
It operates unconventional assets in the Montney and Duvernay formations alongside conventional assets, prioritizing free cash flow generation and shareholder returns while maintaining financial flexibility.
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Is this TSX dividend stock a good buy?
Whitecap Resources delivered impressive second-quarter results while successfully completing its transformational business combination with Veren Energy on May 12, creating Canada’s seventh-largest oil and gas producer with approximately 365,000 BoE (barrels of oil equivalent) per day production and over $15 billion enterprise value.
Whitecap reported strong operational performance, with second-quarter production of 292,754 BoE per day, exceeding internal forecasts. Asset-level performance exceeded expectations across both conventional and unconventional portfolios, driven by robust new volumes from Montney, Duvernay, and Southeast Saskatchewan assets, as well as production optimization through downtime avoidance.
Second-quarter funds flow reached $713 million or $0.75 per share, up 6% year over year, despite WTI (West Texas Intermediate) averaging just below US$65 per barrel. Whitecap generated strong free funds flow of $304 million, returning $191 million to shareholders through base dividends and share repurchases. In the first six months of 2025, Whitecap returned nearly $300 million to shareholders.
The Veren integration has proceeded smoothly, with early wins through corporate cost consolidation and improved credit profile. Following a DBRS (Dominion Bond Rating Service) upgrade to BBB investment grade, Whitecap issued $300 million in three-year senior notes at an attractive 3.761% coupon, lowering average debt costs.
Operationally, Whitecap achieved notable successes in its unconventional portfolio. The Duvernay assets at Kaybob delivered strong outperformance, with the third wine-rack style pad showing promising results. This design has the potential to improve per-well recoveries across three-quarters of legacy Whitecap acreage. At Kakwa, the first triple bench pad exceeded expectations by 14%, achieving over 1,200 BoE per day per well with 65% liquids content.
The conventional portfolio continued building momentum, with Cardium wells at Wapiti significantly exceeding expectations by 59% on average after 180 days. The company’s open-hole multilateral program in Viewfield Bakken showed strong results, with the five most recent wells exceeding type curve expectations by 27%.
Management raised 2025 production guidance to the high end of 295,000-300,000 BOE per day while maintaining the $2 billion capital budget. The balance sheet remains robust with net debt of $3.3 billion, representing approximately one times debt-to-funds flow ratio.
Is the monthly dividend stock undervalued?
Analysts tracking Whitecap stock expect adjusted earnings to expand from $1.38 per share in 2025 to $2.30 per share, while free cash flow is forecast to double from $500 million in 2024 to over $1 billion in 2028.
Whitecap pays shareholders an annual dividend of $0.73 in 2025, which indicates a yield of 6.9%. A widening cash flow base should enable the TSX stock to raise dividends over the next 24 months and enhance the yield at cost.
Analysts remain bullish on Whitecap stock, expecting it to gain 23% over the next 12 months. If we account for its dividend, cumulative returns could be closer to 30%.
