Cenovus Energy Shines, But These Two Canadian High-Yield Oil Stocks Are Also Solid

Fort McMurray Anticipates Economic Revival with Trans Mountain Pipeline Expansion nearing Completion
Published on: Apr 17, 2024

In 2024, the Canadian energy sector has surged by 21.44%, leading among major sectors. Among them, Cenovus Energy Inc (TSX:CVE), the third-largest oil producer in Canada with a market value of CAD 52.9 billion, has seen its stock price rise by 29.9% to CAD 28.52 year-to-date, with a dividend yield of 1.98%.

The rise in Cenovus Energy’s stock price is attributed to the increase in oil prices and the company’s production growth.

Recently, amid the geopolitical tensions in the Middle East and Russia-Ukraine conflict, along with the impact on global economic growth prospects, oil prices have surged to $90 per barrel again. Wall Street investment banks have raised their crude price targets, expecting international oil prices to surpass the $100 mark. The boost in oil prices directly and significantly enhances the performance of oil companies, hence driving up oil stock prices.

On the production front, in the fourth quarter of 2023 (ending December 31), Cenovus Energy achieved a production of 808,600 barrels of oil equivalent (BOE) per day, the second-highest in history. Although the net profit for the full year of 2023 decreased by 36.3% year-on-year to CAD 4.1 billion, the production is projected to increase by 19% over the next 5 years. Additionally, the company will benefit from the completion of the government-owned Trans Mountain pipeline expansion project in the second quarter of 2024, which will enhance export pipeline capacity.

However, from a dividend investment perspective, the dividend yields of the following two Canadian energy stocks are higher than Cenovus Energy:

TC Energy: Dividend Aristocrat

The stock price of TC Energy Corp(TSX:TRP), a CAD 51.6 billion energy infrastructure company, has declined by 4.43% to CAD 48.60 year-to-date. However, it is a dividend aristocrat stock that has raised dividends consecutively for 24 years, currently offering a dividend yield of 7.74%.

The exceptional dividend history is attributed to high-quality assets and outstanding performance. TC Energy reported a net profit of CAD 1.46 billion in the fourth quarter of 2023, with a yearly net profit soaring by 341.3% to CAD 2.83 billion. In addition to its regulated, low-risk utility-like natural gas and power businesses, the company plans to spin off its liquid pipeline business and form a new independent company, South Bow, seeking greater growth opportunities.

Cardinal Energy: Monthly Dividend Payer

Cardinal Energy Ltd (TSX:CJ), a CAD 1.1 billion oil and gas company focused on Western Canada, has seen its stock price rise by 12.68% to CAD 6.89 year-to-date, offering a high dividend yield of 10.36%. Moreover, the company pays dividends monthly and has not suspended dividends since February 2014. The company’s oil and gas revenue in 2023 decreased by 20% year-on-year to CAD 589.6 million, with a profit decline of 65.77% to CAD 103.6 million. However, the ongoing Reford SAGD project will provide the company with adjusted cash flows for the next 20 years or even longer.

Canadian Stocks Dividend Yielding Stocks Natural Gas Oil & Gas