Suncor (TSX:SU) and Canadian Natural Resources (TSX:CNQ) have chalked up nice gains in recent months. Investors who missed the rally are wondering if SU stock or CNQ stock is still attractive and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and long-term returns.
Suncor
Suncor trades near $63 per share at the time of writing, compared to $45 in April, and has more than tripled off the 2020 lows.
Investors punished the stock during the pandemic after Suncor surprised the market with a large dividend cut in the early weeks of the crash. The board eventually reversed the cuts, and Suncor has since raised the distribution above the previous level, but it took some time to convince investors to return to the stock.
Management has done a good job in the past two years of reducing costs, improving efficiency, and delivering solid production growth. Suncor delivered production of 870,000 barrels per day (bbls/d) in the third quarter (Q3) of 2025 compared to 829,000 bbls/d in the same quarter last year.
The refining business saw throughput hit a record 492,000 bbls/d. Suncor’s refineries turn crude oil into gasoline, jet fuel, and other products.
On the retail side, Suncor reported record refined product sales of 647,000 bbls/d in the quarter.
Suncor recently raised its dividend by 5%. Investors who buy SU stock at the current share price can get a dividend yield of 3.8%.
Suncor benefits from its integrated business structure. When oil prices fall, the refining and retail divisions tend to do well. This helps offset the margin hit on the production assets. The business model was what historically made Suncor the preferred pick in the Canadian energy patch before it ran into operational issues.
Looking ahead, the slowdown of electric vehicle adoption could benefit the refining and retail divisions. Suncor operates the Petro-Canada brand of service stations across Canada. At the same time, expansion in oil pipeline capacity will enable Suncor to increase oil production and sales in the coming years.
Canadian Natural Resources
Canadian Natural Resources has increased its dividend annually for the past 25 years. This is an impressive track record in a sector that relies on commodity prices to determine margins. CNRL has a diversified asset base that includes oil sands, offshore oil, conventional heavy and light oil, natural gas and natural gas liquids production.
The company is the sole or majority owner of most of its operations. This increases risk but also gives CNRL the flexibility to quickly move capital around the portfolio to take advantage of positive moves in oil or natural gas prices. CNRL is best known for its oil operations, but is also a major natural gas producer.
Demand for natural gas is expected to increase in the coming years as gas-fired power generation facilities are built to both replace coal-fired plants and to provide electricity for new AI data centres. New liquified natural gas (LNG) export facilities in British Columbia will enable CNRL and other producers to sell their product in higher-priced international markets.
CNRL continues to drive production growth through acquisitions and successful drilling programs. Adjusted earnings rose through the first nine months of 2025 compared to last year, despite weaker energy prices.
Investors who buy CNQ stock at the current price can get a dividend yield of 4.9%.
Is one a better pick?
Investors focused purely on passive income should make CNQ the first choice for the higher yield.
That being said, Suncor has made good progress on its turnaround plan and should continue to attract investors who previously shunned the stock. The integrated business structure provides a more balanced revenue stream than you get at the pure-play producers.
At the current prices, I would probably split a new investment between the two stocks.
