With the conflict in the Middle East continuing to create uncertainty across global energy markets, oil prices have surged, and volatility has picked up significantly for many Canadian stocks.
Many Canadian energy stocks have already seen sharp gains as a result, making it feel as if you’re still on the sidelines, and you’ve missed the opportunity.
But in reality, you don’t just buy stocks because of temporary events, even if they’re having a significant impact right now. Instead, you look for the right exposure to the sector and businesses that you can be confident owning for the long haul.
This is because, while geopolitical instability can disrupt supply chains and create uncertainty in the near term, it can also create massive opportunities for producers operating in safe and stable jurisdictions over the longer term.
That’s why, instead of looking overseas, many investors are turning their attention to Canadian energy stocks.
Canada offers a much more stable regulatory and political environment, with reliable production that isn’t at risk of sudden disruptions, the way it can be in other parts of the world.
And without a doubt, one of the best energy stocks on the TSX to buy and hold for the long haul is Canadian Natural Resources (TSX:CNQ).
Source: Getty Images
Why Canadian Natural is a top-notch energy stock to buy and hold
Canadian Natural Resources has always been one of the highest-quality energy companies on the TSX.
But what really makes it stand out today is its financial position and how it’s returning cash to shareholders. After another strong year in 2025, which reduced its net debt by roughly $2.7 billion, the company recently hit its net debt target, a major milestone.
And what that means is that it’s now in a position to return significantly more of its free cash flow back to investors.
Previously, the Canadian energy stock had been returning 60% of free cash flow through buybacks and dividends. That’s now increased to 75%. And once its net debt declines by another $3 billion, it will be in a position to return all of its free cash flow to investors.
That’s significant for long-term investors because in an environment where oil prices are elevated, free cash flow is surging.
And when a company is returning 75% of that excess cash, while using the rest to rapidly reduce debt, it means that every increase in oil prices is flowing almost directly back to shareholders through dividends and share buybacks.
On top of that, the company recently increased its dividend again, marking the 26th consecutive year it has raised its payout, a rare and undoubtedly impressive streak for an energy producer. With that increase, even after the rally it has seen over the last month, it still offers investors a compelling yield of 3.7%.
So, while many energy stocks will benefit from higher oil prices, Canadian Natural stands out because of how efficiently it converts those prices into shareholder returns.
A high-quality business built for the long haul
Another reason Canadian Natural is so compelling is the type of assets it owns.
Unlike many U.S. shale producers that need to constantly drill new wells just to maintain production, Canadian Natural’s oil sands assets are long-life and low-decline.
That means once production is up and running, it can continue generating steady output for years without requiring the same level of reinvestment.
That’s a huge advantage, because shale producers are constantly spending capital just to replace declining production, whereas Canadian Natural can maintain production levels with far less ongoing investment. That difference leads to much more consistent and predictable cash flow over time.
On top of that, its breakeven costs are relatively low compared to many peers. So even if oil prices were to decline from current levels, the company would still remain profitable and continue generating cash flow.
But in today’s environment, with oil prices elevated, it’s not just profitable, it’s generating significant excess cash flow.
And that’s what makes it one of the best Canadian energy stocks to buy and hold for years. It has scale, strong assets, and a balance sheet that gives it flexibility even in weaker environments.
So, instead of looking at CNQ as just a short-term trade on oil prices, it’s a high-quality business built to generate cash flow across different environments, with a proven track record of returning that cash to shareholders.
