Canadian pensioners and other income investors are searching for good TSX stocks to add to their self-directed Tax-Free Savings Account (TFSA) portfolios focused on dividend income and long-term total returns.
Soaring share prices have pushed many top Canadian dividend stocks to record highs, but nimble investors can still find opportunities on dips.
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Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) trades for $59.50 at the time of writing compared to the 2026 high around $70.
The stock price spiked earlier this year when the war in Iran forced the closure of the Strait of Hormuz, a narrow waterway between Iran and Oman where roughly 20% of the global oil supply normally travels on route to its final destination.
Oil prices briefly fell back to pre-war levels when Iran and the U.S. agreed to allow the glut of oil tankers to make their way safely through the Strait of Hormuz, but recent flare-ups and repeated closures of the waterway are once again driving oil prices higher. West Texas Intermediate (WTI) oil currently sells for US$80 per barrel. It was at US$57 in early January and rose above US$110 in April.
Even if the U.S. and Iran come to a lasting agreement to let the oil tankers move freely through the Strait of Hormuz, it will take time for the backlog to clear and production in the region to ramp up, and repairs are required on damaged infrastructure. As such, global oil prices could remain elevated for some time.
Opportunity
The long-term impact is that international demand for Canadian oil and liquified natural gas (LNG) is rising. This had already started as a result of the war in Ukraine, but is now picking up momentum with the disruptions in the Middle East.
CNRL is a major oil and natural gas producer with assets that include oil sands, conventional light and heavy oil, offshore oil, and natural gas production, as well as significant reserves. Canada’s new goal of becoming an energy superpower will likely lead to the construction of new oil and natural gas pipelines that will transport the fuels to export facilities. CNRL is already benefiting from new oil and natural gas transmission infrastructure completed in recent years, including the Coastal GasLink natural gas pipeline, the LNG Canada export facility, and the Trans Mountain oil pipeline.
CNRL has the ability to grow through a combination of strategic acquisitions and drilling programs. The company takes advantage of market declines to buy production and resources at a discount and then benefits when prices rebound.
Dividends
CNRL raised the dividend in each of the past 26 years. This is a solid track record for a business that relies on commodity prices to determine profit margins. Management is adept at allocating capital to the most profitable areas of the asset portfolio, and CNRL has the balance sheet strength to maintain dividend increases when the energy market hits a rough patch.
Investors who buy CNQ stock at the current share price can get a dividend yield above 4%.
The bottom line
CNRL pays a good dividend that should continue to grow. If you have some cash to put to work in an income portfolio, this stock deserves to be on your radar.
