Amid a macroeconomic environment characterized by low interest rates and market volatility, high-quality energy stocks with stable cash flows and consistent dividend growth have become a core allocation for income-focused investors. Historical data shows that long-term dividend-paying stocks demonstrate significantly stronger risk resilience and compound returns compared to non-dividend-paying assets. This article highlights two North American energy stocks that combine high dividend yields with growth potential—Enbridge (TSX:ENB) and Canadian Natural Resources (TSX:CNQ).
As a leader in North American energy infrastructure, Enbridge’s competitive edge stems from the predictability of cash flows generated by its regulated business model. Through toll-based pipeline operations and long-term “take-or-pay” contracts, the company effectively mitigates commodity price volatility risks. By the end of Q1, it held $13.4 billion in liquidity, reflecting a strong financial position.
The company has paid dividends for 70 consecutive years, with an average annual dividend growth rate of 9% from 1995 to the present. Management expects 3% annual dividend growth through 2026, accelerating to 5% thereafter. Its current forward dividend yield stands at 6%, significantly higher than the S&P 500 average. Enbridge’s four business segments have a $50 billion project backlog, with plans to invest $9–10 billion annually to expand its asset base.
Notably, the company has optimized its debt structure through acquisitions and integration, and its debt/EBITDA ratio is expected to improve gradually, further enhancing dividend sustainability.
Canadian Natural Resources (CNQ) boasts a diversified, balanced asset base and a consistent dividend payout, making it an ideal choice for income-seeking investors. The company holds a large, low-risk, high-value reserve base with relatively low capital reinvestment requirements. Additionally, due to efficient operations, this energy producer maintains strong financial performance and robust cash flows. Backed by these stable cash flows, CNQ has grown its dividend at an annualized rate of 21% over the past 25 years, with an expected dividend yield of 5.1%.
Furthermore, CNQ plans to invest approximately $6 billion this year to enhance its oil and gas production capacity. It’s worth noting that CNQ’s stock is reasonably valued, trading at a forward P/E of 14.8x for the next 12 months.
