In a sector identified for its volatility, one Canadian vitality inventory stands out for its stability — not in worth, however in its unwavering dedication to rewarding shareholders. Canadian Pure Sources (TSX:CNQ) has quietly grow to be a dividend-growth star, with a observe report few vitality firms can match.

Whereas many oil and fuel producers slash or droop dividends throughout downturns, CNQ has achieved the alternative — growing its dividend each single 12 months since 2001. That’s over 20 years of constant dividend progress throughout each bull and bear vitality markets.

A dividend observe report price traders’ consideration

What makes CNQ significantly spectacular isn’t simply its consistency — it’s the tempo of that progress. The corporate’s dividend has expanded at a compound annual progress charge (CAGR) starting from 17% to 29% throughout three-, five-, 10-, 15-, and even 20-year intervals. That form of long-term dividend acceleration is uncommon, particularly within the vitality area.

Although its most up-to-date improve in March was a extra modest 4.4%, CNQ usually boosts its dividend greater than yearly. Whenever you zoom out and have a look at the trailing 12-month (TTM) dividend progress, it nonetheless clocks in at a wholesome 12% — firmly in double-digit territory.

For an oil and fuel producer, that’s an distinctive feat. It speaks volumes about how administration prioritizes returning capital to shareholders — not simply in good instances, however by the business’s inevitable downturns as nicely.

Can CNQ’s dividend progress proceed?

Traders would possibly wonder if this unimaginable run of dividend will increase can final. In any case, the vitality sector is notoriously cyclical, and no firm is resistant to falling oil costs or regulatory shifts. However CNQ has a number of built-in strengths that recommend its dividend-growth story nonetheless has legs.

1. Robust dividend protection: CNQ’s free money move (FCF) payout ratio over the previous 12 months sits at simply 58%, giving it ample room to keep up and develop the dividend — even when money move declines modestly.
2. Strong stability sheet: As of Q2, the corporate had retained earnings of almost $30 billion, which is greater than six instances the dividends it paid during the last 12 months. This monetary cushion provides a major layer of dividend security.
3. High-tier belongings: CNQ owns long-life, low-decline reserves — the most important in Canada, in actual fact — with a reserve life index of 32 years. These belongings assist guarantee predictable manufacturing and money move over the long run.
4. Low breakeven prices: The corporate’s oil manufacturing stays worthwhile at a West Texas Intermediate oil worth within the low-to-mid US$40s, nicely under the present worth of round US$61 per barrel. That offers CNQ some safety even when costs soften.

A dependable earnings choose — however not with out volatility

Whereas CNQ’s dividend appears rock-solid, traders must be ready for inventory worth volatility. The share worth tends to observe oil costs intently, and when crude dips, CNQ’s inventory usually follows. That mentioned, this weak spot can create engaging entry factors for long-term earnings traders.

Proper now, at below $44 per share, CNQ affords a compelling dividend yield of roughly 5.4%. With analysts projecting a 19% near-term upside from present ranges, the inventory affords each earnings and capital appreciation potential — a uncommon mixture in at present’s market.

Investor takeaway

For these looking for a sturdy dividend within the vitality sector, Canadian Pure Sources could also be probably the greatest bets on the TSX. If historical past is any information, this vitality big has the instruments — and the self-discipline — to maintain paying shareholders for years to come back.