Dividend stocks are known for rewarding investors with regular cash payments. Regular cash distributions provide a predictable stream of returns that can support short-term financial needs, while reinvesting these dividends can significantly increase long-term wealth through compounding.
Additionally, there are a few stocks that have paid stable dividends and also beat the TSX with their capital gains year after year. These Canadian stocks have strong fundamentals, resilient earnings, solid balance sheets and significant growth prospects that allow them to maintain and grow their dividend payments and generate attractive share price gains over the long term.
Against this backdrop, investors might want to consider this Canadian natural resources (TSX:CNQ) stock. The oil and gas producer is known for its resilient dividend payments and will beat the TSX time and time again.
CNQ’s dividend history and capital gains
Canadian Natural Resources is one of the most reliable dividend payers. Unlike many of its peers, which have cut or suspended payouts amid commodity downturns and macroeconomic challenges, the energy giant has consistently maintained and increased its dividend.
Strong dividend payments are supported by long-lived, low-return energy assets and a diverse production mix across multiple crude oil, natural gas and natural gas liquids (NGLs). This provides the flexibility to allocate capital to higher return opportunities and helps generate strong cash flow in all market conditions.
Canadian Natural Resources currently pays a quarterly dividend of $0.588 per share, yielding approximately 4.2%. Additionally, Canadian Natural has increased its dividend for 25 years in a row. Over that period, the dividend has a compound annual growth rate (CAGR) of 21%, reflecting both disciplined capital allocation and growing cash flow. In the current fiscal year, CNQ has returned approximately $4.9 billion in dividends and $1.3 billion in share repurchases to shareholders.
In addition to income, investors have also benefited from significant capital growth. Over the past year, shares of Canadian Natural are up more than 35%, outperforming shares of Canadian Natural S&P/TSX composite indexwhich gained 29% in the same period. The longer-term performance is even more compelling. Over the past five years, Canadian Natural shares have grown at a CAGR of approximately 33%, resulting in total capital gains of approximately 317%.
Canadian Natural delivers solid total returns
CNQ is well positioned to continue growing dividends at a solid pace and delivering solid total returns. Thanks to its high-quality assets, the company is well positioned to generate solid cash flow, which supports its payouts and share price. Although the majority of its operations are based in Canada, Canadian Natural also benefits from international exposure.
The company’s focus on driving operational efficiency will help maintain profitability and support dividend payments. Moreover, the strategic acquisitions bode well for future growth. CNQ is also likely to benefit from a vast undeveloped land inventory that offers repeatable drilling opportunities, allowing the company to continue creating value for its shareholders.
The Canadian energy company will also benefit from its portfolio of low-risk conventional projects that can be executed quickly and require minimal capital. These projects can generate solid returns when market conditions are favorable. Furthermore, CNQ’s solid balance sheet provides sufficient support to take advantage of growth opportunities.
Overall, it has a solid earnings base to support dividend growth for years to come and will beat the TSX.
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