Companies with stable production and disciplined spending often have a better chance of supporting generous payouts. One Canadian monthly dividend stock that fits this description is Cardinal energy (TSX:CJ), which currently offers a juicy annual yield of over 7%.
Cardinal Energy: Built for a stable monthly income
If you don’t already know, Cardinal Energy is based in Calgary and focuses primarily on oil and natural gas assets in Western Canada. What makes it interesting for income investors is its low production profile. Simply put, the wells are not losing production as quickly as many others. That means the energy company doesn’t have to invest aggressively to keep production running. These lower reinvestment needs help protect free cash flow and dividends.
Cardinal produced an average of 20,772 barrels of oil equivalent per day in the third quarter of 2025. Production included light oil, medium and heavy oil, natural gas liquids and conventional natural gas. This mix provides some diversification within the energy sector.
These strong operations helped CJ’s stock price rise. After rising nearly 50% in the past year, it currently trades at $9.47 per unit, giving it a market cap of around $1.6 billion.
More importantly for income investors, it offers an annualized dividend yield of 7.6% at this market price, paid monthly.
A look at financial performance and cash flow
Last quarter, Cardinal generated $127 million in oil and natural gas revenues. Meanwhile, adjusted cash flow was $47.3 million.
Although the company’s adjusted cash flow fell 28% year-over-year (YoY), this was mainly because realized commodity prices fell 13% and production was slightly lower. Nevertheless, cash flow remained solidly positive.
Meanwhile, the company also kept a close eye on costs. Net operating costs improved in the latest quarter to $24.05 per barrel of oil equivalent, a 1% improvement from the year before. At the same time, the country managed to reduce its development capital expenditure by 21% year-on-year to $26.3 million, as a result of disciplined spending.
Strong growth prospects in 2026 and beyond
One of the biggest growth drivers for Cardinal is the Reford steam-assisted gravity drainage (SAGD) project in Saskatchewan. During the third quarter, the company invested $14.4 million as the project entered the production phase. Construction and commissioning were completed within budget and ahead of schedule.
Early results indicate the reservoir is performing well, and initial oil volumes look promising as production increases.
Cardinal Energy expects Reford to make a meaningful contribution in 2026. At a West Texas Intermediate (WTI) crude oil price of $65, added production is expected to generate about $100 million in adjusted cash flows this year. That extra cash could lower the company’s overall breakeven point, strengthen dividend coverage and create more flexibility to reduce debt or reinvest in the company, making it the top Canadian monthly dividend stock to consider in 2026.
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