With a 16.3% weight in the S&P/TSX Composite Index, the Canadian energy stocks are the third-largest contributor to total returns on the Canadian stock market, after financials (32.2%) and materials (19.6%). Whether you wish to match market returns, or attempt to beat the TSX, you can’t afford to ignore Canadian oil and gas stocks. If you have $2,500 in new capital to deploy, buy energy stocks right now. Canadian Natural Resources (TSX:CNQ) and Suncor (TSX:SU) stocks are prime candidates for a long-term holding.
The Canadian energy space is currently undergoing a massive wave of consolidation, as the biggest players acquire smaller peers to harvest synergy benefits and streamline operations. This means a new era of capital discipline whereby dividend policies are becoming more generous and share repurchases are a standard feature as the industry balances production growth with shareholder returns.
Holding investment positions “forever” is one of the most effective ways to maximize your portfolio’s tax efficiency. No capital gains taxes will accrue. By holding onto the high-quality dividend payers, you also allow ample time for payouts to grow, which in turn augments your portfolio’s passive income potential. This long-term approach could eventually allow you to leave heirs with substantial wealth, and dividends that could match the initial investment.
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Buy Canadian Natural Resources stock for multi-decade consistency
When looking for a “forever” stock, Canadian Natural Resources (TSX:CNQ) stands out for its legendary commitment to shareholder returns. Right now, the $122.1 billion oil and gas behemoth is committed to allocating 60% of its free cash flow from growing production to shareholder returns, which include dividends and share repurchases. The commitment rises to 100% of free cash flow once the net debt of $17.2 billion falls to $12 billion. This may take three to five years, but higher oil prices could shorten the period to this lucrative target, enriching shareholders.
What makes Canadian Natural Resources stock a forever investment? The resilience in the energy stock’s operating earnings and financial strength is rooted in a diversified asset base that includes low-cost, low-decline oil sands assets which continue to thrive through commodity price cycles. These geographically expansive operations generate the consistent free cash flow required to fund its rising quarterly dividends.
CNQ has built an incredible dividend growth reputation with 25 consecutive years of dividend increases. Over the last quarter-century, CNQ stock’s dividend has grown at a compound annual growth rate (CAGR) of over 21%. If you’d invested $2,500 in CNQ stock 25 years ago at a split-adjusted price of around $2.70, your 926 shares would receive $2,176.10 in total dividends this year – a massive yield of 87% on initial investment cost. CNQ had four stock splits during the period.
The dividend yield could be higher if CNQ raises dividends for 2026 during an earnings event early next month.
A $2,500 investment in Canadian Natural Resources stock 25 years ago could have grown into more than a $99,000 investment today. Dividends, fully reinvested, could have grown the portfolio beyond the $52,680 capital gain mark. This is a hypothetical example to show that long-term investment returns can be insanely high for patient stock pickers.
Future returns will differ, but a new investment in the high-quality CNQ stock today could earn a 4% dividend yield, with growth likely starting next month.
Suncor Energy stock
Suncor Energy (TSX:SU) stock is another essential candidate for a long-term energy portfolio. Unlike pure-play oil and gas producers, Suncor is an integrated giant, spanning oil sands development, offshore production, oil refining, and a massive 1,800 retail and wholesale network outlets, including Petro-Canada stations. Suncor’s wide integration allows the business to capture value at every stage of the energy life cycle, with minimal exposure to new U.S. tariffs.
The company recently reported its strongest operational year in history, achieving record upstream production and refining throughput. Suncor shares its profits with shareholders through dividends and share repurchases. Its current quarterly dividend at $0.60 per share should yield 3.2% annually. With a dividend payout ratio of approximately 48%, Suncor retains enough cash to continue reducing debt and funding buybacks while rewarding patient investors.
A $2,500 investment in Suncor stock 25 years ago would have grown into a $34,400 position over the past 25 years, with full dividend reinvestment. Based on a split adjusted price of $9.30, the 2026 dividend could yield 25.8% for investors who have held the stock since 2001.
