Canadian energy stocks have long been some of the best dividend stocks to own for high-yielding returns. Several of the top dividend stocks from the Canadian energy industry have consistently paid shareholders their dividends for decades. Some of the best names even boast dividend growth streaks that help investors match and beat inflation rates.
It is understandable that TSX energy stocks have been some of the most reliable investments for income-seeking Canadians. Many blue-chip stocks from this sector offer high yields, resilient cash flows, sustainable payout ratios, and the ability to continue rewarding shareholders through the different cycles of commodity prices.
Against this backdrop, here are three dividend stocks from the Canadian energy industry that offer attractive dividends, warranting consideration as long-term holdings in your self-directed investment portfolio.
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Peyto Exploration & Development
Peyto Exploration & Development Corp. (TSX: PEY) is a compelling TSX energy stock to buy and hold for high-yielding dividends. The energy company focuses on developing crude, natural gas, and natural gas liquids through its assets, generating cash flow that it returns to shareholders through monthly dividends.
The stock pays investors $0.12 per share each month, translating to a 6.1% annualized dividend yield. Besides its attractive dividends, Peyto boasts the kind of disciplined capital allocation and low-cost business model that lets it sustain such high-yielding dividends. The first quarter of this fiscal year saw its production increase by 10% year-over-year, and its earnings increased by around 50%.
Freehold Royalties
Freehold Royalties Ltd. (TSX: FRU) is another compelling energy sector stock to buy and hold for the long run to generate passive income through your portfolio. The $2.7 billion market cap firm is a dividend-paying oil and gas royalty company. Freehold does not conduct drilling, exploration, or production activities in the energy sector itself. Rather, it owns royalty interests in crude, natural gas, and natural gas liquids properties across North America.
It is a business model that lets Freehold generate revenues as energy producers develop its lands, enabling the firm to generate significant revenue without the operational risks and cash outlays of its own production operations. As of this writing, Freehold stock trades for $16.16 per share and pays $0.09 per share each month, translating to an annualized 6.7% dividend yield that you can lock into your portfolio today.
Gibson Energy
Gibson Energy Inc. (TSX: GEI) is another Canadian energy stock boasting high-yielding dividends. Gibson is a $5.1 billion market cap oil infrastructure company that engages in the storing, optimizing, processing, and gathering of liquids and refined products from the energy sector. Besides its midstream segment, Gibson also has marketing operations that diversify its revenue stream.
Most of its earnings come through long-term contracts, letting it generate predictable cash flows that allow it to fund its dividends and reduce its exposure to fluctuations in commodity prices. Gibson Energy stock pays investors $0.45 per share each quarter. As of this writing, it trades for $29.80 per share, which means its payouts translate to an annualized 6% dividend yield.
Foolish takeaway
When investing in dividend stocks, high-yielding returns should not be the deciding factor. Rather, the underlying business must have the fundamentals, balance sheet, and long-term prospects that can sustain the returns for years and decades.
While not without risks, Peyto stock, Freehold stock, and Gibson Energy stock can be good investments to buy and hold in your portfolio for the long run.
