The idea of turning your hard-earned savings into a dependable stream of passive income is always appealing. Imagine your $10,000 not just sitting idle but working quietly in the background, sending you cash every few months. That’s the power of dividend investing.
For income-focused investors looking beyond high-growth stocks, stable oil and gas producers could be a smart place to look, especially with companies like Parex Resources (TSX:PXT), which currently offers an eye-popping 8.2% annualized dividend yield while maintaining impressive operational strength. Its consistent production growth and commitment to shareholder returns make it a solid choice for anyone seeking reliable income.
In this article, I’ll highlight why Parex could be an amazing dividend stock to buy right now, with the potential to deliver around $823 in annual passive income on a $10,000 investment.
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A top Canadian dividend stock for passive income
If you don’t know it already, this Calgary-based oil and gas producer, with a market cap of around $1.8 billion, is one of the largest independent operators in Colombia. Parex’s business mainly revolves around exploring and producing oil and natural gas across key blocks in Llanos, Magdalena, and Putumayo — regions that continue to deliver stable production growth.
At its current share price of about $18.68 apiece, this Canadian dividend stock offers an over 8% annualized dividend yield, paid quarterly. That means an investor putting in $10,000 today could expect roughly $823 in yearly income, which is significantly higher than what most traditional savings accounts or bonds can offer right now.
Strong operations
Parex’s latest quarterly results clearly showed exactly why it’s become a favourite for income investors. In the third quarter, the company posted funds flow from operations of US$105 million, backed by an average production of 43,953 barrels of oil equivalent per day (boe/d) — reflecting a 3% sequential rise.
Despite softer oil prices, its operating netback stood at a healthy US$34.71 per barrel, showing its ability to generate profits even when crude oil prices are way off their peak.
Focused investments and a disciplined growth approach
Another key reason Parex looks like one of the top dividend stocks to buy is its disciplined capital strategy. Notably, the company spent US$80 million on capital expenditures in the latest quarter, mostly directed toward development drilling at its LLA-32, LLA-34, and Capachos blocks. Even after this spending, it generated US$25 million in free funds flow. This figure was enough to cover its dividend and share repurchases while keeping a cash balance of US$70 million and just US$10 million in bank debt.
Parex prefers to focus on sustainable production rather than chasing risky expansions. Its 2025 plan aims to keep average production between 43,000 and 47,000 boe/d, with an eye on exceeding that in the fourth quarter. But more importantly, this growth plan is backed by stable operating cash flow and a strong balance sheet, not by excessive borrowing.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | TOTAL INVESTMENT | QUARTERLY DIVIDEND / SHARE | TOTAL YEARLY PAYOUT |
| Parex Resources | $18.68 | 535 | $9,993.80 | $0.385 | $823.90 |
| Prices as of Nov 21, 2025 |
A long-term play for reliable income seekers
Parex’s long-term strategy is as much about consistency as it is about growth. Beyond its ongoing projects, the company’s Llanos Foothills program holds strong potential. This high-impact exploration initiative could add a new layer of production and reserves to its portfolio in the coming years.
With a solid balance sheet, minimal leverage, and a dividend yield higher than 8%, I find Parex stock to be a solid choice for income-focused investors who want exposure to the energy sector without taking on excessive risk.
