While the broader markets are trading near all-time highs, one blue-chip TSX stock is down almost 27% from record levels. Valued at a market cap of $86 billion, Canadian Natural Resources (TSX:CNQ) has trailed the TSX Index in the past year due to falling oil prices and a challenging macro environment.
Despite the ongoing pullback, CNQ stock has returned close to 180% in the last 10 years. After adjusting for dividend reinvestments, cumulative returns are closer to 340%. Let’s see why this TSX dividend stock remains a top investment right now.
Source: Getty Images
Is CNQ stock still a good buy?
Canadian Natural Resources delivered exceptional Q2 results that showcase why it stands out in the energy sector, combining operational excellence with disciplined capital allocation and robust shareholder returns.
CNQ completed its planned Athabasca Oil Sands Project turnaround five days ahead of schedule and on budget, while achieving July production of 602,000 barrels per day with an upgrader utilization of 106%. The company’s Q2 production totaled 1.4 million BOE (barrels of oil equivalent) per day, up 135,000 BOE per day year-over-year, which indicates strong organic growth across its diversified asset base.
CNQ closed two accretive acquisitions, adding 82,000 BOE per day of production, including the Palliser Block with 850 light oil drilling locations and Grand Prairie Montney assets with 150 liquids-rich locations. These deals immediately contribute cash flow while expanding CNQ’s inventory of high-quality drilling opportunities by roughly 1,000 locations.
CNQ returned $1.6 billion to shareholders in Q2 alone through dividends ($1.2 billion) and buybacks ($400 million), bringing year-to-date returns to $4.6 billion.
With net debt below $17 billion, debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) at 0.9 times, and over $4.8 billion in liquidity, CNQ stock maintains a fortress balance sheet. The company’s industry-leading breakeven remains in the low-to-mid $40 WTI (West Texas Intermediate) range, providing substantial downside protection while generating strong cash flows at current oil prices.
A focus on dividend growth
CNQ has increased its dividend for 25 consecutive years, with management expressing confidence in continued growth potential backed by accretive acquisitions and organic development opportunities across its long-life, low-decline asset base.
While Canadian Natural Resources is part of the highly cyclical energy sector, it has raised its annual dividends from $0.48 per share in 2016 to $2.13 per share in 2024. Given its outstanding share count, the yearly dividend expense for CNQ stock will be around $4.9 billion in 2025.
Analysts tracking the TSX dividend stock forecast the company’s free cash flow to expand from $6 billion in 2025 to $11 billion in 2029. An expanding free cash flow base should translate to higher dividend payouts in the future while allowing the company to reduce balance sheet debt and target accretive acquisitions. Notably, Bay Street expects CNQ’s annual dividend to increase to $2.50 per share in 2027.
Moreover, given consensus estimates, CNQ stock is projected to expand its adjusted earnings per share from $3.21 in 2025 to $7.71 in 2029. Today, CNQ stock is priced at 12.8 times forward earnings, which is higher than its three-year average of 11 times. If the TSX stock reverts to its mean earnings multiple, it could trade around $85 in early 2029, indicating an upside potential of over 100%. If we adjust for dividends, total returns would be over 120%.
