Dividend Investors: Premier Canadian Energy Stocks to Buy in December

These three Canadian energy stocks with yields of up to 5% are solid dividend buys in preparation for the new year.

| More on:
Key Points
  • • Proven cash flow champions with strong yields: Canadian Natural Resources (5% yield, 25 years of dividend growth at 21% CAGR) and Suncor Energy (3.9% yield, recent 5% dividend hike) demonstrate exceptional cash generation.
  • • Natural gas upside with Tourmaline: Tourmaline Oil (3% yield) is positioned to benefit from strengthening natural gas fundamentals, with prices being driven by LNG Canada's ramp-up and increasing utility/data center demand.
  • 5 stocks our experts like better than these energy stocks

There’s no question about it – dividend stocks are invaluable investments in a well-diversified portfolio. Whether you reinvest or spend their consistent, and hopefully growing dividend income, they certainly have a positive wealth impact on investors.

Canadian energy stocks have long provided Canadian dividend investors with growing dividend income. In fact, this sector is one of Canada’s engines of growth, and one that can be extremely lucrative. While oil prices have weakened recently, the medium-term outlook remains positive. As for natural gas prices, they have already started to strengthen, and I expect continued strength in the new year.

Without further ado, here are three Canadian energy stocks to consider for your dividend income needs.

An analyst uses a computer and dashboard for data business analysis and Data Management System with KPI and metrics connected to the database for technology finance, operations, sales, marketing, and artificial intelligence.

Source: Getty Images

Canadian Natural Resources

Canadian Natural Resources (TSX: CNQ), one of Canada’s premier energy companies, has shown itself to be quite the cash cow. These inflows have been driven by the company’s diversified, long-life asset base (33 years), with exposure to heavy oil, light crude oil, natural gas, and oil sands. These assets require minimal capital investment, and this has driven exceptionally strong cash flow generation.

As for uses of this cash, management’s stated objective is to return much of this wealth to its shareholders. In the three and nine months ended September 2025, the company generated $3.9 billion and $11.7 billion, respectively, in adjusted funds flow. This has translated into strong dividend growth out of CNQ. In fact, the company has a track record of 25 consecutive years of dividend growth, with a compound annual growth rate (CAGR) of 21% over that time period.

Canadian Natural is currently yielding a very generous 5%.

Suncor Energy

Another one of Canada’s top energy stocks, Suncor Energy Inc. (TSX: SU), has proven its worth as a top dividend stock. Like Canadian Natural, Suncor has committed to returning a big chunk of its cash flow to investors.

Suncor is an integrated energy company, with assets across the oil and gas value chain – exploration and production, and refining and marketing. This diversification supports stable and growing cash flows that are somewhat shielded from oil and gas price fluctuations.

In the third quarter, Suncor’s adjusted funds from operations came in at $3.8 billion or $3.16 per share. This was the second-highest third quarter in history. This result was achieved despite lower WTI oil prices, which highlights the company’s value. Due to these record results, Suncor instituted a 5% dividend hike in the quarter, to $2.40 per share. Suncor is currently yielding 3.9%.

Tourmaline Oil

Finally, Tourmaline Oil Corp. (TSX: TOU) is a Canadian natural-gas weighted energy stock. It has also committed to return a large portion of its excess cash flows to shareholders. This has resulted in strong returns for its shareholders and rapidly growing dividend payments.

Natural gas prices have been rallying as of late. U.S. natural gas prices have rallied 68% since September lows. And Canadian natural gas prices have rallied from pennies in September to more than $2.25 currently. This strong pricing action is being driven by the opening of LNG Canada, which is increasingly boosting natural gas demand. It’s also being driven by the electrification of the energy grid, with demand from utilities and data centres rising rapidly.

Tourmaline reported lower cash flow in its latest quarter, down 3% to $719.6 million. This was due to weak natural gas prices in Canada. In fact, prices were at their lowest levels in over 30 years in the third quarter. Given this, Tourmaline’s third-quarter cash flow is an exceptionally strong result.

Tourmaline is currently yielding a very respectable 3%, with the likelihood of many more special dividend payments to come.

Fool contributor Karen Thomas has a position in Tourmaline Oil. The Motley Fool recommends Canadian Natural Resources and Tourmaline Oil. The Motley Fool has a disclosure policy.

More on Energy Stocks

Natural gas
Energy Stocks

Why This Overlooked Stock Might Be the Best Dividend Play in Canada

TC Energy (TSX:TRP) may very well be one of the better dividend growth heroes on the entire TSX these days…

Read more »

pumpjack on prairie in alberta canada
Energy Stocks

This Top Dividend Stock Recently Dropped 15%! Should You Buy Now or Wait?

Dividend growth should continue, supported by a strong capital program.

Read more »

a person watches a downward arrow crash through the floor
Energy Stocks

Markets Crash: This Dividend Has Historically Held its Ground

Is a market crash coming? Stay focused on quality companies with reliable cash flows, and a history of resilience and…

Read more »

investor schemes to buy stocks before market notices them
Energy Stocks

GIC or Dividend Stock? Here’s Where I’d Put $10,000 for the Next 5 Years

I'd invest in this hydro producer and wait for the share price to recover if the timing goes wrong.

Read more »

man gives stopping gesture
Energy Stocks

Enbridge Stock: Buy, Hold, or Sell This September

The recent pullback has investors wondering if Enbridge is now oversold.

Read more »

Dam of hydroelectric power plant in Canadian Rockies
Energy Stocks

The Dividend Stock That Could Buy You Back a Few Hours of Peace of Mind

Hydro One (TSX:H) stock looks like a decent deal for income investors after a huge slump.

Read more »

a man celebrates his good fortune with a disco ball and confetti
Energy Stocks

Where Will Cenovus Stock Be in the Next 3 Years?

With energy prices boosting Cenovus’s cash flow, here’s how the company is benefiting and positioning itself for the future.

Read more »

oil pumps at sunset
Energy Stocks

Enbridge Stock: Should Investors Buy, Sell, or Hold Right Now?

Is Enbridge now oversold?

Read more »