Valued at a market cap of almost $100 billion, Canadian Natural Resources (TSX:CNQ) is among the largest energy companies globally. While CNQ is part of a cyclical sector, the TSX energy stock has returned 1,720% to shareholders since the start of 2001. If we account for dividend reinvestments, cumulative returns are well over 3,200%.
Despite these outsized returns, CNQ stock is down 16% from its all-time highs and offers a tasty dividend yield of $2.35 per share, which equates to almost 5%.
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Is CNQ stock still a good buy?
Canadian Natural Resources is Canada’s largest heavy crude oil producer. It maintains significant positions in natural gas and light oil production across Western Canada and internationally. The company leverages its extensive land base and owned infrastructure to maximize operational efficiency and value creation across multiple producing regions.
CNQ’s Western Canadian operations focus on liquids-rich natural gas and light crude oil development in the Montney, Duvernay, and Deep Basin plays spanning northwest Alberta and northeast British Columbia.
Canadian Natural holds one of the largest land positions among peers in these core areas and provides drill-to-fill inventory close to existing infrastructure, reducing development costs.
International operations focus on mature North Sea assets in the United Kingdom and high-value light crude production offshore Côte d’Ivoire in West Africa.
The Espoir and Baobab fields utilize floating production, storage, and offloading vessels to process and export light oil, which deliver some of the highest returns in the company’s portfolio.
Canadian Natural’s competitive advantage in heavy oil is tied to large-scale drilling programs and centralized treating facilities that achieve economies of scale. The company owns primary heavy oil assets alongside advanced recovery operations, including the world-class Pelican Lake polymer flood.
Oil sands operations include thermal in-situ production and zero-decline mining and upgrading facilities at Horizon that produce high-quality synthetic crude oil.
Is the TSX dividend stock still undervalued?
Canadian Natural Resources outlined an impressive development pipeline during its investor presentation earlier this month. CNQ highlighted approximately 745,000 barrels of oil equivalent per day in future growth opportunities across its diversified asset base.
The company currently produces over 1.6 million BOEs daily with a strong balance sheet showing net debt to EBITDA (earnings before interest, tax, depreciation, and amortization) of just 0.9 times.
Management detailed significant expansion potential in three core areas. Conventional assets are expected to deliver approximately 295,000 BOEs per day of growth through drill-to-fill opportunities and facility expansions, leveraging the company’s 25 million acres of land and extensive infrastructure.
Thermal in-situ operations deliver 210,000 barrels per day of medium-term growth, including the Jackfish brownfield expansion and the Pike 2 greenfield project, with highly competitive capital efficiencies ranging from $22,000 to $40,000 per flowing barrel.
Oil sands mining and upgrading assets offer the largest opportunity, with potential to add 240,000 barrels per day of additional production through the Jackpine mine expansion and the Horizon North mine project. These zero-decline assets target capital efficiency of $50,000 to $60,000 per flowing barrel.
CNQ recently completed a transaction with Shell, taking 100% ownership of the Albian oil sands mines, expected to generate $30 million in annual operational synergies plus $30 million in one-time savings.
Canadian Natural targets 2026 production of 1.59 million to 1.65 million barrels of oil equivalent per day with capital spending around $6.4 billion while maintaining its disciplined capital-allocation approach.
Analysts forecast the TSX dividend stock to expand adjusted earnings per share from $3.43 in 2025 to $4.15 in 2027. In this period, the annual dividend is expected to increase from $2.13 per share to $2.50 per share. Notably, CNQ has raised its annual dividend from $0.46 per share in 2015, indicating an annual growth rate of 16.5% over the past decade.
If CNQ is priced at 13 times forward earnings, which is reasonable, it should gain 15% over the next 12 months. If we adjust for dividends, cumulative returns will be closer to 20%.
