Pulsar Helium Inc. (TSXV:PLSR)
The Force in Helium.
The price of oil rose from $70 per barrel early this year to $90 in April, and has been hovering around $75 per barrel for most of the time since then. Over the past three years, oil prices have largely fluctuated between $70 per barrel and $100 per barrel. Actually, this is a profitable price range for Canadian energy producers.
Canadian energy producers have significantly de-risked their business models over the past few years, improving their balance sheets through significant debt reductions, while also focusing more on operational efficiencies, cost reductions and profitability. It’s safe to say that the risks of investing in Canadian energy stocks are now highly manageable, not to mention the steady dividend yield. Here are three stocks which are doing better than most peers at providing safe, growing dividends.
Canadian Natural Resources (TSX:CNQ) should be one of the most popular Canadian energy stocks right now, with numerous advantages, including long asset lives, low production costs, and superb operational efficiency. The company’s oil sands and conventional assets provide investors with a secure and stable income stream. Over the past 24 years, this energy stock has grown its annual dividend at a compound annual growth rate (CAGR) of 21%.
Since the beginning of 2023, the company has increased its quarterly dividend three times for a cumulative increase of 24%. It’s worth pointing out that Canadian Natural Resources met its C$10 billion debt target earlier this year. Meaning the company will begin to honour its commitment to return all excess cash flow to shareholders. While the dividend yield on this energy stock is currently just 3.9%, the yield is expected to continue to grow as more cash flows to shareholders.
Pembina Pipeline (TSX:PPL) owns and operates energy infrastructure assets in Western Canada, including gathering and egress pipelines, storage, export terminals and natural gas processing facilities. The 5.5% dividend yield is solid as the company generates about 85% of its revenue from long-term contracts. Over the past few years, the company has focused on using its strong cash flow to reduce debt, and hence increased its dividend every year.
Q1 quarterly report shows that Pembina’s balance sheet is very strong and provides sufficient capital to invest in growth projects. This quality energy stock is worth considering for investors looking for a safe and stable dividend.
Cenovus Energy (TSX:CVE) is a major energy producer that also has large refining operations in North America. The company has very high quality energy assets with reserves that will last for decades. The company has had some issues with its refining operations, but most of those have now been resolved and refining capacity continues to increase. A few weeks ago, the company reported strong first quarter results.
It’s worth pointing out that petrol prices are still firm, despite the recent fall in oil prices. That’s good news for Cenovus, as the company can improve its refining margins. Cenovus stock currently yields just 2.7% in dividends, but since 2020, the dividend per share has increased nearly tenfold.
The company is working towards a C$4 billion debt target, and once achieved it plans to return all idle cash to shareholders. This means there is plenty of room for further dividend growth, and the possibility of a special dividend cannot be ruled out as well.
