US President Donald Trump announced a 10 per cent tariff on energy imports from Canada earlier this month, scheduled to take effect on 4 March 2025. The imposition of tariffs could affect Canadian oil and gas companies that have cross-border operations and integrated energy trade with the United States. However, that doesn’t mean investors should abandon investment opportunities in energy sector stocks.
The following two energy stocks have paid record dividends to investors in 2024, with further growth potential in 2025 as well.
Canadian Natural Resources (TSX:CNQ) is one of Canada’s premier oil and gas companies, delivering solid operational and financial returns for decades. Over the five years to 31 December 2023, the company’s revenues grew 57% to C$22.9 billion; operating cash flow increased 40% to C$12.3 billion, and net income grew 52% to C$8.2 billion.
The growth was driven largely by higher oil prices ($74/bbl in 2023 and $57/bbl in 2019), as well as solid operational performance.
And all of this is the backdrop that supports the company’s record dividend. In fact, after the company achieved its target debt levels, management returned 100 per cent of its free cash flow to shareholders, as previously promised, resulting in Canadian Natural Resources increasing its dividend twice in 2024 to a current dividend yield of 5.2 per cent. With oil prices staying above $70, investors can expect another record dividend in 2025.
As Canada’s largest natural gas producer, Tourmaline Oil (TSX:TOU) has a proven track record of profitability. Natural gas prices have been rising sharply, up 5.6% so far this year and 70.5% since the end of 2023.
In the face of strong margins, the company is paying a special dividend totalling C$2 per share alongside a fixed dividend of C$1.40 per share for 2024. Based on the current share price, the dividend yields 4.9 per cent.
Looking ahead, investors can expect Tourmaline to continue its record dividend in 2025. This is thanks to two factors: firstly, the company’s stated intention to distribute a large portion of its free cash flow to shareholders; and secondly, because it continues to benefit from the very positive fundamentals of the natural gas industry and its low-cost operating model.
As LNG growth, power electrification and coal switching are expected to drive up natural gas prices, Tourmaline’s stock and dividend will rise as well.
