Canada’s benchmark index has shown renewed strength since April, including a seven-week win streak that ended on September 26, 2025. Nonetheless, market analysts expect the S&P/TSX Composite to resume and continue its winning run until year-end.
TSX’s heavyweight sectors – such as financials, energy, and technology – have picked up steam heading into the fourth quarter. InPlay Oil (TSX:IPO), in particular, is red-hot and climbing faster than the broader market. This high-yield dividend stock is worthy of serious consideration if you’re investing for income and growth.
The energy stock’s year-to-date gain is 39% versus the TSX’s 20.4-plus%. At $12.59 per share, the dividend yield is a mouth-watering 8.6% ($1.08 annual dividend per share). Furthermore, the payout frequency is monthly.
Resilience against volatility
InPlay Oil, a $350 million growth-oriented light oil development and production company, develops light oil and natural gas assets. It operates in the Belly River and the highly prolific Cardium Formation in Alberta. A dividend policy was introduced in late 2022, driven by the company’s strong balance sheet.
According to management, concentrating on large oil-in-place pools with low recovery factors, low declines, and long-life reserves enables resilience against commodity volatility. The Board-approved updated capital program for 2025 is between $53 million and $60 million.
In the first half of 2025, the net loss was $6 million compared to the net income of $7.1 million a year ago. However, realized operating income rose 61% year-over-year to $71.5 million, while free adjusted funds flow (FAFF) climbed 659% to $38 million versus the same period last year. InPlay Oil also secured commodity hedges to mitigate risks, extending through 2025 and into 2026.
Long-term sustainability
On April 7, 2025, InPlay Oil completed the $293 million deal to acquire the Pembina Cardium Oil assets of Obsidian Energy. In Q2 2025, or in post-transaction, average quarterly production increased 125% to 20,401 barrels of oil equivalent per day (boe/d) from Q1 2025.
More importantly, the transformative acquisition enhances the asset base, adds financial resilience by boosting free cash flow, and should eventually improve shareholder returns. In addition to the longer reserve life, the acquired assets boast an expanded inventory of high-quality drilling locations. InPlay Oil expects to generate strong FAFF for many years to come.
Dividend overview
InPlay Oil is relatively new to the dividend universe, but it is building a reputation as a go-to passive income provider. The first dividend payment was in November 2022, and to date, the small-cap stock’s dividend history is 35 months. Its record earnings in 2021 and 2022 firmed up the company’s decision to introduce a dividend policy.
The IPO’s overall return in five years is 1,736.4%-plus, representing a compound annual growth rate of 78.9%. Market analysts’ 12-month average and high price targets are between $15.20 (+21%) and $18 (+43%).
The National Bank of Canada, through National Bank Financial, raised its rating for the IPO this month to “outperform.” InPlay Oil’s strong position in the Cardium formation and FAFF generation are the twin bull cases.
Rare opportunity
InPlay Oil is a rare buying opportunity. It is not often that you can invest in a high-yield, high-flying stock. You can combine two investing strategies: income and growth.
