The volatility of power shares can understandably scare buyers away. Whereas that is comprehensible, there may be much more to those shares than volatility. Greater than ever, power corporations are creating worth and cleansing up their operations as they head into the long run. That is what has enabled Suncor Vitality Inc. (TSX:SU) to offer buyers with a beneficiant dividend yield of 4.1% right this moment.

Ought to we purchase Suncor Vitality inventory for this dividend?

Suncor’s turnaround

A couple of years in the past, Suncor was within the headlines. However not in a great way. You see, the corporate was scuffling with security considerations, accidents, operational inefficiencies, and all-around sub-optimal efficiency.

A brand new CEO and an inner shake-up adopted. After hitting lows of roughly $15 again in 2020, Suncor’s inventory is at present buying and selling at greater than $55. This represents a rise of just about 270%. Furthermore, Suncor’s dividend has been on the rise. Actually, Suncor’s dividend has elevated 170% within the final 5 years, which is equal to a compound annual progress charge (CAGR) of twenty-two%.

Driving regular money flows

Suncor’s enterprise is comprised of a downstream phase (refining) in addition to an upstream phase (exploration and manufacturing). This diversification gives Suncor with the advantage of extra predictable and regular money flows, with every phase pushed by barely totally different variables.

Within the 5 years ended 2024, Suncor’s working money circulate elevated 500% to $15.9 billion. Within the first half of 2025, this sturdy efficiency continued, with $5 billion in working money circulate.

This can be a key attribute of the enterprise – extra secure and resilient money flows. And Suncor’s administration has dedicated to the return of those money flows to shareholders. In Suncor’s most up-to-date quarter, practically $1.5 billion was returned to shareholders by dividends and share buybacks. It’s simply one of these enterprise that’s very conducive to regular, dependable dividends.

Beating expectations

Suncor has come out of the laborious occasions by creating a brand new focus and a brand new tradition. The outcomes of this? Document manufacturing, document refinery utilization, and decrease working prices, to call just some.

In fact, this has additionally come hand-in-hand with sturdy backside line outcomes which have been beating expectations for a lot of quarters now. In 2024, Suncor posted earnings per share (EPS) of $5.40, 6% greater than the prior yr.

Lastly, Suncor has been producing sturdy returns on account of the corporate’s give attention to worth creation, debt discount, and working efficiencies. For instance, Suncor’s return on fairness (ROE) at present stands at 12.7%. ROE is a measure of how effectively an organization makes use of shareholders’ cash to generate revenue. So, which means for each $1 of frequent fairness, Suncor generates $12.70 of web earnings.

The underside line

Whereas Suncor is an power firm that may be topic to volatility because of the nature of a commodity enterprise, the corporate has taken steps to enhance the standard and amount of its earnings and money flows. That is leading to better worth creation, better efficiencies, and better shareholder returns. Due to this fact, I might undoubtedly purchase Suncor Vitality inventory for its high-quality dividend.