Canada’s Toronto Stock Exchange is set to lose one of its major oil sands blue-chip stocks within the next few months. In a deal announced Monday, global oil giant Shell will acquire Canada’s ARC Resources (TSX: ARX) stock in a $22 billion deal that may close during the second half of 2026. An energy sector consolidation wave is passing through the oil sands. But the oil industry stock I’d most want to buy and hold for the next decade is likely to stand its ground. Cenovus Energy (TSX: CVE) stock is performing exceptionally well, and I expect the $69 billion integrated energy powerhouse to generate respectable total returns over the next 10 years.
Cenovus stock has been a strong winner so far this year, posting a near 60% total gain supported by a surge in global oil prices as Middle East geopolitics challenges keep disrupting crude oil supply chains. The rally comes at a time Cenovus is growing its annual production organically and integrating the MEG Energy assets acquired during the past year.
Whether the MEG acquisition ends up generating $400 million in annual cost synergies (savings) by 2028 remains to be seen. But I would be comfortable holding CVE stock in a long-term portfolio even if synergistic benefits don’t materialize. Here’s why.
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Why I would buy and hold Cenovus Energy stock for 10 years
Cenovus Energy could sustain its current production rates for the next 28 years based on its proven and probable resources, with significant future resource growth potential. Holding the energy stock for a decade and beyond appears highly worthwhile. The company exited 2025 at a production rate of 970,000 barrels of oil equivalent per day (boe/d) and management is currently executing growth plans to exceed 1.1 million boe/d by 2028. Upstream production is growing sustainably, giving CVE more oil to sell every year during the next decade.
The company’s downstream refineries portfolio performed impressively going into 2026, boasting a capacity utilization rate of 98%. While there’s still some room for improvement, especially as Suncor continues to celebrate refinery efficiency levels above 100%, Cenovus is in prime position to harvest massive cash flow as long as oil prices remain above its low break even points.
Low break-even oil prices a key returns booster
One of the most compelling reasons to own Cenovus for the long term is its stellar low operating cost profile. Its combined Canadian oil sands operations can sustain production at just $21 per barrel. Overall, the company can generate positive returns on investments and afford to cover its dividends to shareholders at an average West Texas Intermediate (WTI) benchmark price of just US$45 per barrel.
Even if oil prices fall back to the US$60 WTI levels that most Canadian energy stocks used for their 2026 budgets, Cenovus’s low-cost profile makes it a winner that should thrive throughout future oil price cycles during the next decade.
One can understand why CVE stock has generated wild capital gains as oil prices rallied past the US$100 a barrel mark early in 2026. The economic gains to Cenovus should be immense as it harvests boatloads of free cash flow.
A shareholder-returns machine
Cenovus Energy stock isn’t just a cash cow; it’s a disciplined capital-return story. The company has raised its dividend substantially over the past five years, and its business plan supports potential annual dividend growth of 10% or better. When periods of excess cash arrive, management funnels it straight back to investors through dividends and share repurchases.
Cenovus targets allocating 100% of excess free funds to shareholders once net debt falls to management’s $4 billion long-term target. While net debt was at $8.3 billion going into 2026 following the MEG acquisition, higher oil prices are quickening the pace of debt reduction.
A dirt-cheap valuation for the decade ahead
Despite this year’s surge, Cenovus stock trades at just 11 times forward earnings. More compelling, its forward price/earnings-to-growth (PEG) ratio sits at a mere 0.4 — a number that screams undervaluation relative to the energy stock’s earnings growth potential.
Cenovus Energy’s proven low-cost operator, a 28-year resource base, double-digit dividend growth potential, aggressive stock buybacks, and a bargain-bin valuation make it an attractive energy stock to buy and hold for the next decade.
