1 Canadian Dividend Stock Down 13% to Buy and Hold Forever

Canadian Natural Resources stock has pulled back 13%, but strong Q1 results and 26 years of dividend growth make it a buy.

Key Points
  • Canadian Natural Resources posted record production and $4.4 billion in adjusted funds flow in the first quarter of 2026, even as the stock trades well off its highs.
  • The company just marked 26 straight years of dividend increases, with a compound annual growth rate of 20% and an annualized payout of $2.50 per share.
  • Falling debt levels mean shareholder returns could soon rise to 100% of free cash flow, giving CNQ multiple ways to reward long-term holders.

Every so often, the market hands income investors a gift. A blue-chip dividend stock could trade at a lower multiple due to volatile macro conditions, which allows you to buy a quality company at a discount.

One such TSX stock is Canadian Natural Resources (TSX: CNQ), which is down 13% from its all-time high. Meanwhile, the underlying business just delivered one of its strongest quarters ever.

For patient investors building a dividend portfolio, this gap between price and performance is worth a closer look.

stock chart

Source: Getty Images

The bull case for this Canadian dividend stock

Canadian Natural is one of the largest independent energy producers in Canada, with a portfolio that spans natural gas, light crude oil, heavy crude oil, bitumen, and synthetic crude oil.

CNQ also owns and operates its own infrastructure, including pipelines and processing facilities. Its control over midstream assets helps keep operating costs low, protecting profit margins even when oil prices decline.

Management has spent years focused on what it calls continuous improvement, squeezing more production and lower costs out of assets it already owns.

According to Canadian Natural’s Q1 earnings call, quarterly production averaged approximately 1,643,000 barrels of oil equivalent per day, up about 4% from the same period last year.

It included several company records, among them record quarterly North American exploration and production liquids production of approximately 773,000 barrels of oil equivalent per day, and record quarterly production at Jackfish of approximately 134,000 barrels per day.

CNQ generated adjusted net earnings of $2.4 billion, or $1.17 per share, and adjusted funds flow of $4.4 billion, or $2.10 per share, in the quarter.

Canadian Natural reduced its net debt to below $16 billion as of the end of April 2026, which pushed its targeted shareholder returns to 75% of free cash flow on a forward-looking basis.

Management flagged that the next milestone, a net debt target of $13 billion, is now within reach this year. Hitting that number would trigger an even bigger jump, moving shareholder returns to 100% of free cash flow.

A solid dividend track record

The board increased the quarterly dividend to an annualized $2.50 per common share, marking 26 consecutive years of dividend increases with a compound annual growth rate of 20%.

Canadian Natural returned approximately $1.5 billion directly to shareholders in the quarter, including $1.2 billion in dividends and $300 million through share repurchases.

Between April 1 and May 5, the Canadian energy giant spent $360 million on buybacks, bringing year-to-date direct returns to shareholders to approximately $3.2 billion.

Canadian Natural has multiple long-term growth levers, which should drive future dividends higher. For instance, the company is advancing engineering work on a 30,000-barrel-per-day Jackfish expansion and a 70,000-barrel-per-day Pike 2 project, both aimed at extending production growth well into the future.

The Foolish takeaway

A 13% pullback in CNQ has landed on top of record production, falling debt, and a dividend that has grown every single year for more than two decades.

For investors looking to build a portfolio around businesses that reward patience, Canadian Natural is worth serious consideration today.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources. The Motley Fool has a disclosure policy.

More on Dividend Stocks

warehouse worker takes inventory in storage room
Dividend Stocks

REITs Are Falling as Bond Yields Rise: This Canadian Landlord Looks Better After the Selloff

Granite REIT has fallen about 17% from its 52-week high as higher bond yields pressure real estate stocks.

Read more »

dividend stocks are a good way to earn passive income
Dividend Stocks

How to Set Passive Income Goals You Can Actually Reach

Vanguard FTSE Canadian High Dividend Yield ETF (TSX:VDY) and other dividend stocks to consider for big passive income.

Read more »

voice-recognition-talking-to-a-smartphone
Dividend Stocks

I’m passing on Telus After its 55% Dividend Cut: Here’s What I’d Watch Instead

Telus (TSX:T) is getting cheaper, but one TSX telco still looks like a better overall value.

Read more »

Concept of rent, search, purchase real estate, REIT
Dividend Stocks

Housing Needs More Supply: This Canadian Builder Doesn’t Need Home Prices to Boom

Canada needs dramatically more homes, even if home prices don’t rise.

Read more »

some REITs give investors exposure to commercial real estate
Dividend Stocks

For Monthly Income: A 7% Dividend Stock to Consider

This high yield stock is backed by solid fundamentals, such as strong balance sheet, dependable cash flows, and steady distributions.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

A 7% Dividend All-Star I’d Buy First in My TFSA

Given its attractive yield, stable underlying business, and reasonable valuation, SmartCentres would be an appealing opportunity for income-seeking investors.

Read more »

Agricultural harvesting at the last light of day, aerial view.
Dividend Stocks

Canada Wants $70 Billion in Trade With India: I’d Watch This TSX Stock

Nutrien gives Canada’s India trade ambitions an existing commercial engine, but profitable fertilizer sales still have to follow.

Read more »

you're never too young or old to start investing in stocks
Dividend Stocks

Side Hustle Taxes in Canada: What You Can Deduct

You can deduct the reasonable business portion of expenses incurred to earn side-hustle income. Consider investing this extra income for…

Read more »