Canadian Natural Resources (TSX: CNQ) reported another outstanding quarter yesterday, yet the stock is down about 1%, which is normal volatility for any energy stock on any single trading day. Besides, after rallying roughly 35% year to date, some profit-taking isn’t surprising.
The bigger question is whether this small pullback creates a buying opportunity. While near-term volatility is almost guaranteed, Canadian Natural Resources continues to show why it’s one of the highest-quality energy stocks on the Toronto Stock Exchange.
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Short-term uncertainty is ever-present
Energy investors should expect more volatility over the coming months.
Oil prices continue to react to geopolitical developments, particularly tensions involving Iran and the Strait of Hormuz. Earlier this year, Brent and West Texas Intermediate (WTI) crude surged above US$110 per barrel before falling back to roughly US$80, illustrating how quickly sentiment can shift.
Meanwhile, changing U.S. policy announcements around trade, sanctions, and energy production have added another layer of uncertainty. Higher oil prices also complicate the outlook for inflation and interest rates, creating market-wide swings that can affect even the strongest energy companies.
The good news is that Canadian Natural Resources has repeatedly proven it can perform well through commodity cycles with a track record of raising its dividend by about 25 consecutive years with an eye-popping 20-year dividend-growth rate of approximately 20%.
Another quarter of exceptional execution
Canadian Natural Resources delivered record adjusted earnings of $4.6 billion in the second quarter (Q2), up 87% from the previous quarter and roughly three times higher than a year ago. Adjusted earnings per share climbed at similar rates to $2.19, while adjusted funds flow reached nearly $6.9 billion (up 57% versus Q1 and double versus Q2 2025).
Just as importantly, the company continued rewarding shareholders. It maintained its dividend and repurchased $1.1 billion of its own shares during the quarter, demonstrating management’s confidence in the business.
The balance sheet also remains a key competitive advantage. Canadian Natural Resources estimates it can cover sustaining capital spending and its dividend with WTI oil prices in the low-to-mid US$40s per barrel. That low breakeven gives the company considerable flexibility, even if oil prices weaken from current levels.
Simply put, this is a business built to generate cash throughout the commodity cycle — not just when oil prices are exceptionally high.
The bottom line
At roughly $63 per share, Canadian Natural Resources offers investors a dividend yield approaching 4%, while analysts’ average price target suggests approximately 11% upside over the next year.
After such a strong run, the stock may not be a screaming bargain, and investors should expect continued volatility as oil prices fluctuate. However, that’s the nature of investing in the energy sector.
For long-term investors, the investment thesis remains solid. Canadian Natural Resources combines low-cost operations, disciplined capital allocation, consistent share buybacks, and a growing dividend with one of the strongest balance sheets in the industry.
A 1% post-earnings decline doesn’t change the long-term story. Canadian Natural Resources remains one of the best-managed energy companies in Canada and looks like a solid stock to buy for investors seeking a combination of income, shareholder returns, and long-term capital appreciation, especially on meaningful market corrections. As always, keep energy exposure at a level that fits your risk tolerance and maintain a diversified portfolio.
