For years, the world ran on oil, and oil companies dominated the market. These days, however, as more and more countries push for renewable energy, the future of oil is becoming uncertain. Oil companies are having to redefine themselves to stay on top.
Despite the uncertainties facing the industry, oil companies still dominate the energy sector. They make up about 31-32% of the world energy mix. In 2024 alone, the oil and gas sector brought in around $3.58 trillion in revenue. Oil companies make up around 3.8% of the global economy.
Investing in oil stocks might seem like risky business. But for those who know where to look, it can still be a profitable enterprise. If you’re considering adding Canadian oil companies to your investment portfolio, here’s what you should know.
Related: List of stocks in the TSX energy sector
What are oil stocks?
Oil stocks are companies engaged in the production, transportation, and refinement of crude oil. They are typically classified as one of the following:
- Upstream exploration and production (E&P): These companies find oil, natural gas, and natural gas liquids, then bring them to the surface for production.
- Midstream: Once oil has been extracted and produced, midstream companies are responsible for transporting, storing, and exporting it.
- Downstream: These companies refine crude oil into consumer products, such as gasoline, diesel, and jet fuel.
In addition, an oil company could also be classified as an “integrated company,” which means it operates in more than one of the segments listed above. For instance, ExxonMobil operates both upstream and downstream, and it’s typically called an integrated company.
Top Canadian oil stocks
When it comes to oil stocks, Canadian investors have many options. To help you narrow them down, here are just a few of North America’s top oil stocks.
| Oil Stock | Description |
| Enbridge (TSX: ENB) | A large midstream company that owns an extensive system of pipelines transporting oil between Canada and the U.S. |
| Canadian Natural Resources (TSX: CNQ) | One of the largest oil and natural gas producers in Western Canada, with productions averaging 1.36 million barrels of oil per day and reserves of over 6.9 billion |
| Suncor (TSX: SU) | An integrated energy company responsible for developing oil sands, extracting offshore oil and gas, and selling oil products via its retail company, PetroCanada |
| Cenovus Energy (TSX: CVE) | An integrated oil company that produces around 778,000 barrels of oil per day, with 5.9 billion in reserves |
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Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) is a Calgary-based oil and natural gas company that has grown into one of Canada’s largest energy producers, supported by vast, long-life reserves and efficient operations. Its diversified mix of light and heavy crude oil, natural gas, bitumen, and synthetic crude continues to underpin strong cash generation.
This financial strength allows it to continue thriving in a normalized oil-price environment. CNQ benefits significantly when crude trades above US$60, with free cash flow rising meaningfully as prices climb. The company has used this surplus to expand its already substantial reserves, reduce debt, and improve its long-term financial flexibility. These actions reinforce CNQ’s reputation as one of the most stable and efficient operators in the Canadian energy landscape.
The stock has climbed roughly 16% over the past three months, benefiting from a rotation away from expensive tech names and toward stable, cash flow-rich producers. With operations spanning Western Canada, the North Sea, and Offshore Africa, CNQ maintains one of the lowest breakeven levels in the sector, even when including dividends.
Shareholders have also benefited from the company’s disciplined approach to capital allocation. Canadian Natural Resources is one of the longer standing dividend knights and has increased its dividend for 25 consecutive years at an impressive annualized rate of 21 percent. Its forward yield now sits at approximately 5.2 percent, and management intends to continue returning roughly 60 percent of free cash flow through dividends and buybacks.
Looking ahead, CNQ is continuing to invest heavily in its future. The company plans to spend $6.6 billion this year, including an additional $690 million earmarked for acquisitions, and expects to deploy another $6.4 billion next year to support further production improvements. Management anticipates that these investments will lead to a three percent increase in output in 2026. Combined with its vast reserves and cost advantage, these initiatives position CNQ for sustained growth in production, revenue, and shareholder returns.
Enbridge
Enbridge (TSX: ENB) is one of North America’s largest energy infrastructure companies, moving roughly one-third of the oil produced in Canada and the United States and transporting about 20% of the natural gas used by American homes and businesses. Its network spans crude oil pipelines, natural gas transmission systems, regulated gas utilities, an oil export terminal, and a growing base of renewable energy assets including wind and hydrogen energy. With a market capitalization near $145 billion, Enbridge has the financial strength to pursue strategic acquisitions and major development projects that fuel long-term growth.
The company has steadily expanded into renewables and long-term contracted power assets, adding stability to its earnings alongside its regulated utilities and take-or-pay contracts. Enbridge now has a secured capital backlog of roughly $35 billion, giving it clear visibility on growth through 2030. Rising natural gas demand, driven in part by the expansion of AI data centres and global LNG needs, further supports its outlook and the performance of its recently acquired U.S. gas utilities.
A key attraction for investors is Enbridge’s exceptional dividend history. It has increased its payout every year since 1995, solidifying its status as one of Canada’s most reliable dividend payers and is a dividend knight like CNQ. Perhaps the most attractive part of Enbridge’s stock is the hefty payout on its dividends. Over the past three decades, dividend growth has averaged about 9% annually, and today the stock offers a yield of around 5.6%. Management expects future increases in the 3% to 5% range as new assets contribute to cash flow.
Suncor
Suncor (TSX: SU) is a major Canadian integrated energy company with operations that span the full oil and gas value chain, from upstream production in the oil sands to refining and retail sales through its Petro-Canada network of more than 1,800 locations. As the world’s largest producer of bitumen with refineries in Eastern Canada and Colorado, Suncor benefits from a diversified structure that helps stabilize cash flows even when commodity prices fluctuate.
The company recently posted another record-setting quarter driven by strong production and disciplined cost control. Upstream output reached 870,000 barrels per day, upgrader utilization hit 102%, and refinery throughput climbed to 492,000 barrels per day — all while operating costs remained flat at $9.7 billion. These results show the impact of Suncor’s renewed focus on operational excellence and efficiency.
Following this recent earnings release, Suncor’s share price has risen more than 6%, continuing a three-year gain of 26% and a five-year increase of nearly 230%. Despite this performance, the stock still appears undervalued at about 13.5 times forward earnings and 1.6 times book value. As Suncor continues to meet its guidance, investor skepticism from past challenges may fade, creating room for further upside.
For dividend investors, Suncor offers a yield just above 4% and strong dividend growth. Its annual payout has increased 36% over the last three years, representing nearly 11% compound annual growth. With robust cash flow, improving margins, and a clear focus on returns, Suncor remains a compelling long-term option in the Canadian energy sector.
Cenovus Energy
Cenovus Energy (TSX: CVE) is a Calgary-based integrated oil and gas company with a strong focus on its oil sands assets, complemented by conventional crude oil, natural gas, and natural gas liquids production. Its oil sands operations provide long-life, low-decline, high-margin output, helping stabilize results across commodity cycles. This asset mix continues to serve as a natural hedge within its broader upstream and downstream business segments.
The company has been one of the standout performers in the TSX energy sector, rising roughly 40% year to date and significantly outperforming the broader market. Momentum accelerated after Cenovus won an $8.6 billion takeover battle for MEG Energy, approved on November 6, 2025. The transaction positions Cenovus to become Canada’s second-largest oil and gas producer, with expected output of about 720,000 barrels of oil equivalent per day post-merger and the potential to reach 850,000 boe/d by 2028. Analysts broadly rate the stock a “buy,” with many raising price targets following the deal’s approval.
Operationally, Cenovus posted a strong third quarter, with upstream production hitting a record 832,900 boe/d and U.S. refining throughput reaching an all-time high of 605,300 barrels per day at a 99% utilization rate. Net earnings surged 56.8% year over year to $1.3 billion, even as revenue dipped modestly to $13.2 billion – a feat management attributes to disciplined execution and operational efficiencies.
Cenovus trades around $25 per share and currently offers a 3.1% dividend yield, supported by a 13-year record of uninterrupted quarterly payments. With the MEG Energy acquisition expected to generate substantial cost synergies and operating efficiencies, Cenovus is positioned for continued growth.
Does the oil industry have a future?
The oil industry has a near future, yes. Though many countries, companies, and people are choosing renewable energy over petroleum, most of the world still depends on oil.
And given the size and cash reserves of the biggest oil companies, it’s safe to say they’re not going under anytime soon.
That said, oil will likely have a smaller role in the future of energy. Many experts claim global oil demand will peak in 2030, after which renewables will begin to overtake oil and gas as the world’s primary sources of energy.
The challenge for oil companies is redefining their operations and transitioning to a world without oil. Companies to watch for in this sector include those investing in green technology, shrinking oil operations, and developing renewable energy, such as wind and solar.
Additionally, look for companies with immense cash reserves, low operating costs, and operations in more than one region or country. Only oil companies with strong financial backing and sustainable operations have the fortitude to weather the oil industry’s twists and turns.
Are oil stocks right for you?
Oil stocks aren’t for the faint of heart. Though many oil companies have enormous market caps and large dividend payouts, their stocks aren’t as stable or as predictable as other large caps and blue chips.
For one, oil stocks are especially sensitive to geopolitical events, oil-related disasters (like oil spills), global supply, and consumer demand. As we’ve seen recently with Russia’s invasion of Ukraine, the political affairs of a petrostate can easily cause oil price fluctuations.
Not only can countries who produce oil influence prices, but also the entire oil cartel, OPEC (Organization of the Petroleum Exporting Countries), can do the same. Within a single day, OPEC can punish oil stocks by withholding barrels of oil produced, or help these stocks by producing more.
For investors who can face volatility without acting irrationally, oil stocks could present some unique opportunities. Many of the best oil stock companies pay out a higher-than-average dividend, which could provide a lucrative source of passive income.
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