Valued at a market cap of over $90 billion, Canadian Natural Resources (TSX:CNQ) is among the largest oil and gas companies in the world. While CNQ is part of a cyclical sector, it has delivered market-beating returns to long-term shareholders.
The Canadian energy giant has returned 180% to shareholders in the last 10 years. If we adjust for dividend reinvestments, the cumulative gain is closer to 340%.
In November 2025, the TSX energy stock is down 22% from all-time highs, allowing you to buy the dip and benefit from a forward yield of 5.5%. Let’s see why Canadian Natural Resources stock is a good buy right now.
Is CNQ stock a good buy right now?
Canadian Natural Resources posted impressive second-quarter results, driven by stellar operational performance amid a challenging macroeconomic environment.
In the June quarter, CNQ produced 1.42 million barrels of oil equivalent (BoE) per day, despite planned maintenance that temporarily reduced output by 120,000 BoE per day. Production in July rebounded sharply with oil sands mining and upgrading operations averaging 602,000 barrels per day at an impressive 106% upgrader utilization rate.
The company completed two significant acquisitions that immediately boost cash flow and add substantial drilling inventory. The Palliser Block acquisition, which closed in late June after regulatory delays, brought 50,000 barrels per day of production and 850 high-quality light oil drilling locations.
In early July, Canadian Natural acquired liquids-rich Montney assets near Grand Prairie for $750 million, which is expected to contribute 32,000 barrels of oil equivalent daily and add 150 additional drilling locations. Combined, these deals add roughly 1,000 locations to the development pipeline while maintaining unchanged capital guidance for the year.
Management demonstrated impressive cost discipline across operations. The recently acquired Duvernay assets are performing better than expected, with operating costs dropping to $8.43 per barrel in the second quarter, a 11% decrease from the first quarter. This translates to $60 million in annual savings compared to initial targets.
Drilling and completion costs per well have improved 16% on a length-normalized basis, with further gains of $200,000 per well versus first-quarter levels.
The company generated $3.3 billion in adjusted funds flow and returned $1.6 billion to shareholders through $1.2 billion in dividends and $400 million in buybacks during the quarter. Year-to-date shareholder returns reached $4.6 billion through early August, and net debt remained manageable at just under $17 billion, with a strong balance sheet showing 0.9 times debt-to-earnings before interest, taxes, depreciation, and amortization and over $4.8 billion in liquidity.
Canadian Natural maintains its industry-leading breakeven in the low to mid-$40 per barrel WTI range. Management expects similar total shareholder returns in 2025 compared to 2024 despite allocating only 60% of free cash flow to distributions versus 100% last year, which reflects confidence in the accretive nature of recent acquisitions and organic growth opportunities across the diversified asset base.
Is the TSX dividend stock undervalued?
Canadian Natural Resources has increased its annual dividend from $0.48 per share in 2016 to $2.13 per share in 2024. In this period, its effective yield has risen from 3% to almost 7%.
Analysts tracking CNQ stock forecast adjusted earnings to expand from $2.85 per share in 2024 to $7.71 per share in 2029. In this period, its annual dividend is forecast to expand from $2.13 per share to $2.60 per share.
If the TSX dividend stock is priced at 10 times forward earnings, it could return 75% to shareholders within the next four years. After adjusting for dividends, cumulative returns could be closer to 100%.
