The Canadian energy stocks I’m buying now: they’re a bargain

This year has begun again with geopolitical shocks as the United States attacked Venezuela, which has rich oil, silver and gold deposits. This sent gold and silver prices to record highs, while crude oil prices fell. Behind the stark difference in their momentum lay the nature of these raw materials. While gold and silver carry great value and are used as a safe haven in times of unrest, oil is faced with a supply glut. Too much supply of oil can cause the price to drop. Still, many Canadian oil stocks saw a rise on the Venezuelan news.

Why are Canadian oil stocks rising?

Venezuela has been in crisis for some time. It produces an estimated 600,000 to 700,000 barrels per day, but faces US sanctions on oil exports. If the US plans to bring order to Venezuela, it will take billions of dollars in investment and four to five years to make a difference. That gives Canada the upper hand because it already has a rich energy infrastructure.

What happens if the US oil companies enter Venezuela?

There’s something about Venezuela that’s making oil stocks nervous. The country has the largest proven oil reserves, with an estimated 303.2 billion barrels (as of 2024), according to facts of the Organization of the Petroleum Exporting Countries (OPEC). It is even larger than Saudi Arabia’s proven reserves of 267.2 billion barrels. Yet Venezuela contributes only 1% of global supply, due to more than a decade of sanctions, underinvestment and infrastructure decline.

If American companies enter Venezuela, they can free up those reserves and drive down oil prices. This could change the oil supply chain again. That could disrupt oil prices in the long term. How Venezuelan politics will develop will determine the future of black gold.

This Canadian energy stock is a bargain

Meanwhile, oil stocks will remain volatile. This has created the opportunity to purchase Canadian natural gas supplies, Tourmaline oil (TSX:TOU). It is the largest natural gas producer in Canada and the fifth largest in North America. As oil prices fluctuate, natural gas is the next big energy commodity with growing demand.

Natural gas power plants power data centers with artificial intelligence (AI), heat homes and provide energy for cooking. The shift to greener alternatives has made natural gas a trusted and less polluting energy source. Over the next twenty years, natural gas producers could become the next dividend kings.

Tourmaline will benefit from the boom in natural gas demand. Since it started paying dividends in 2018, dividends have increased annually. In 2022, the country began paying special dividends as North American natural gas exports gained momentum following the war between Russia and Ukraine. Basic dividend growth is 85% of free cash flow.

Tourmaline plans to grow its free cash flow by increasing production and reducing debt. This free cash flow will be partly used for dividend payments. Regardless of the oil cycle, Tourmaline will continue to increase dividends on natural gas exports.

Now is a good time to buy the shares. Although the dividend yield is 3.3%, the growth rate and special dividend make it a bargain if you stay invested for the long term.