AETUF - 5 Top Canadian Oil and Gas Dividend Stocks

Canadian oil and gas stocks have faced a rollercoaster ride over the past few years, but many still offer strong payouts for dividend investors.

Many of the top oil and gas stocks on the TSX and TSXV managed to post gains in 2020 and into 2021, despite challenging market conditions. Analysts remain optimistic about the sector, and there are signs that Canadian oil and gas companies may be trading at a discount.

Canadian energy stocks that pay a dividend — a portion of corporate profits that is paid out on a quarterly basis — are attractive to shareholders who prefer a long-term approach to wealth creation. Dividend investing allows for a steady flow of income and the opportunity to increase equity holdings, and dividend investors look for stocks with high dividend yields.

The ability to offer a dividend payment is a point of pride for companies in the oil and gas industry, and in 2021 some are increasing dividends. “The dividend yield is a financial ratio that represents the dividend income per share, divided by the price per share,” according to Investopedia . “It is considered a sign of clear financial health and confidence for a company to pay out dividends.”

The Investing News Network has compiled a list of the five top Canadian oil and gas dividend stocks using TradingView’s stock screener . The companies on this list have dividend yields of greater than 3 percent, as well as debt-to-equity ratios (total equity divided by total liabilities) of 0.71 or less. This ratio reflects the strength of the company’s balance sheet.

1. Orca Energy Group (TSXV: ORC.B )

Market cap: US$112.91 million; dividend yield: 7.08 percent; debt-to-equity ratio: 0.64

Orca Energy Group is an international energy company that develops, produces and sells natural gas resources in Africa, and is a major supplier of natural gas to Tanzania’s domestic energy market. The company’s main asset is the world-class Songo Songo field in Tanzania.

In February 2021, Orca Energy increased its shareholder dividend payout by 25 percent. According to Jay Lyons, interim CEO, “The dividend increase reaffirms our ongoing strategy of returning capital to shareholders through quarterly dividends and share buy backs.”

2. CNOOC (TSX: CNU ,NYSE:CEO)

Market cap: US$67.79 billion; dividend yield: 6.26 percent; debt-to-equity ratio: 0.33

CNOOC is China’s largest producer of offshore crude oil and natural gas. One of the largest independent oil and gas exploration and production companies in the world, CNOOC’s core operations are in Bohai, the Western South China Sea, the Eastern South China Sea and the East China Sea in offshore China. The company also has oil and gas assets in Asia, Africa, North America, South America, Oceania and Europe.

3. Canadian Natural Resources (TSX: CNQ )

Market cap: US$46.39 billion; dividend yield: 4.79 percent; debt-to-equity ratio: 0.71

Established in 1973, Canadian Natural Resources is a senior oil and natural gas producer. The company has oil and gas exploration and production operations in North America, predominantly in the Western Canadian provinces of Alberta, Saskatchewan and British Columbia. It also has assets in the UK portion of the North Sea, as well as offshore assets in Côte d’Ivoire and South Africa.

In early March 2021, Canadian Natural Resources boosted its dividend after better-than-expected quarterly profits as oil prices recovered from the downward pressure of COVID-19 lockdowns.

4. ARC Resources (TSX: ARX )

Market cap: US$2.78 billion; dividend yield: 3.04 percent; debt-to-equity ratio: 0.27

Headquartered in Calgary, Alberta, ARC Resources is engaged in crude oil and natural gas exploration, development and production. The company’s assets include its Montney operations, located across Northeast British Columbia and the Pembina Cardium in Alberta.

ARC announced a definitive agreement to merge with another Montney producer, Seven Generations Energy (TSX: VII ,OTC Pink:SVRGF), in February 2021. The combined company will continue to offer shareholders a dividend payment.

5. Suncor Energy (TSX: SU ,NYSE:SU)

Market cap: US$42.43 billion; dividend yield: 3.02 percent; debt-to-equity ratio: 0.62

Suncor Energy is one of Canada’s leading integrated oil and gas companies. Suncor operates oil sands development and upgrading in Alberta’s Athabasca Basin, offshore oil and gas production on the east coast of Canada and operations in the UK, Norway, Libya and Syria. The company refines crude oil products and distributes them under the Petro-Canada brand through retail stations located in Canada.

Suncor shaved its dividend payout by 55 percent in May 2020 after suffering a C$3.5 billion quarterly loss. In March 2021, the company announced that it “remains focused on maintaining the financial health and resiliency of the company,” and has made “significant progress” toward reducing its debt load.

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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.