Analysts maintain an optimistic outlook for Canadian stocks following an impressive run and stellar performance in 2025. However, because of persistent trade uncertainty and new geopolitical tensions, the TSX might be hard-pressed to deliver double-digit returns. Fortunately, there are buying opportunities at the start of the year, including an income and value play.
Whitecap Resources (TSX:WCP) is my top pick for 2026. Besides the relatively low share price of $12, the monthly dividends provide a buffer against market swings. The large-cap stock pays a hefty 6.08% dividend.
A $12,000 investment (1,200 shares) in WCP transforms into $60.80 in monthly passive income, with the principal remaining intact. Assuming you reinvest the payouts (12 times a year), the capital will compound to $16,250.75 in five years or $22,007.24 in 10 years, respectively.
Size and scale
The $14.57 billion growth-oriented Canadian energy company develops oil and natural gas assets in the Western Canadian Sedimentary Basin. Whitecap Resources is the seventh-largest oil & gas producer and fifth-largest natural gas producer in the country.
Whitecap Resources, along with industry peers, continues to advocate for changes in the energy industry. Since last year, they have requested the federal government to create an action plan to unlock the world-class oil and natural gas resources. The goal is to strengthen the country’s economic sovereignty, resilience, and prosperity.
Value creation
During the Investor Day on January 5, 2026, management announced that Whitecap will take a counter-cyclical approach to capital allocation. Instead of expanding organic production in a lower pricing environment, the company will prioritize share repurchases.
The share buybacks will provide an additional return of capital beyond the $0.73-per-share annual base dividend. Furthermore, Whitecap can absorb oil prices of $60 per barrel or above. As of January 26, 2026, Brent and West Texas Intermediate crude oil prices were $65.81 and $61.01 per barrel, respectively. In the first three quarters of 2025, free funds flow increased 101% year over year to $702.5 million.
Conversely, in a higher commodity price environment, the strong inventory depth and commodity optionality will enable Whitecap to achieve measured growth. Furthermore, excess cash for share repurchases and debt reduction will increase significantly if oil prices are in the $70 to $80 range.
Competitive advantages
Whitecap Resources targets a total shareholder return of 10% to 15% annually. Its light oil conventional drilling locations and unconventional Montney and Duvernay locations are competitive advantages. The diversified portfolio boasts high-return drilling inventory across multiple plays. It would deliver robust returns for decades to come.
The board-approved capital budget of $2.0 to $2.1 billion for 2026 targets an average annual production of 370,000 to 375,000 barrels of oil equivalent per day (boe/d). It should likewise generate substantial free funds flow. Approximately 75% of the total capital budget is directed towards the unconventional division.
Shareholder friendly
Whitecap Resources maintains financial resilience to support its value-creation strategy. This year, the plan is to return $900 million in dividends to shareholders and to purchase an additional $300 million worth of shares. WCP’s current share price is definitely a steal.
