Valued at a market cap of $91 billion, Canadian Natural Resources (TSX:CNQ) is an energy heavyweight that has generated inflation-beating returns for long-term shareholders. In the last 20 years, CNQ stock has returned 222% to investors. However, if we adjust for dividend reinvestments, cumulative returns are closer to 474%, compared to the TSX index returns of “just” 288%.
It means a $1,000 investment in the TSX stock in September 2005 would be worth close to $5,730% right now. Despite this outperformance, CNQ stock is down 23% from all-time highs, allowing you to buy the dip and benefit from a tasty yield of over 5%.
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Is this TSX dividend stock a good buy right now?
In the second quarter (Q2) of 2025, Canadian Natural Resources reported an adjusted funds flow of $3.3 billion while adjusted net income stood at $1.5 billion. Production reached 1.42 million barrels of oil equivalent (BOE) per day in Q2, up 135,000 BOE daily from the prior year, driven by strategic acquisitions and organic growth.
CNQ’s ability to complete the Athabasca Oil Sands Project (AOSP) turnaround five days ahead of schedule while maintaining strong production across its diversified asset base showcases operational excellence.
The AOSP turnaround temporarily reduced output by 120,000 barrels per day. However, production in July bounced back strongly to 602,000 barrels per day, with upgrader utilization hitting 106%.
The company’s acquisition strategy continues to deliver value, with two recent deals adding 82,000 BOE per day of production and approximately 1,000 high-quality drilling locations. The Palliser Block acquisition, delayed until late June due to regulatory review, and the July Grand Prairie Montney acquisition for $750 million demonstrate Canadian Natural’s ability to identify accretive opportunities that immediately contribute cash flow.
CNQ returned $1.6 billion to shareholders in Q2, comprising $1.2 billion in dividends and $400 million in share buybacks. In the first six months of 2025, the energy heavyweight has returned $4.6 billion to shareholders, showcasing its commitment to capital discipline.
CNQ maintains its industry-leading breakeven of $40-45 West Texas Intermediate while targeting similar 2025 shareholder returns to those of 2024, despite allocating only 60% of free cash flow to returns, down from 100% previously.
Canadian Natural’s Duvernay operations achieved $60 million in annual operating cost savings, exceeding the original target of $40 million. Moreover, drilling and completion costs improved 16% year-over-year. Heavy oil multilateral drilling programs added 26 additional wells beyond the original plans, indicating capital efficiency gains.
Is CNQ stock undervalued?
CNQ’s balanced portfolio spanning oil sands, heavy oil, light oil, and natural gas provides flexibility across commodity cycles. With net debt of less than $17 billion and strong liquidity of $4.8 billion, Canadian Natural maintains financial flexibility while pursuing organic growth and acquisitions that are expected to drive long-term shareholder value creation.
Analysts tracking CNQ stock forecast adjusted earnings per share to expand from $3.46 in 2024 to $7.71 in 2029. A widening earnings base should allow CNQ to raise the annual dividend per share from $2.13 in 2024 to $2.49 in 2027.
If CNQ stock is priced at 10 times forward earnings, it should trade around $77 in early 2029, indicating an upside potential of 75%. If we adjust for dividends, cumulative returns could be closer to 95%.
