Canadian natural resources
Canadian natural resources (TSX:CNQ) has increased its dividend every year for the past 25 years. That’s a solid track record for a company that relies on commodity prices to determine margins and profits.
CNRL is known for its oil sands production activities, but the company also has conventional light and heavy oil assets, as well as offshore oil and significant natural gas production and reserves. Stocks have fallen in recent days on concerns that increased supplies from Venezuela will replace Canadian heavy oil sold to the United States. A small impact is likely, but the market reaction was probably exaggerated.
CNRL’s diverse products, efficient operations and strong balance sheet allow it to generate good margins at low energy prices, while at the same time making major strategic acquisitions to drive production growth. New pipeline infrastructure connecting Canadian producers to the coast is already helping CNRL and its peers sell to international buyers. Additional capacity could be on the way as part of the administration’s plan to reduce dependence on the United States for energy sales.
CNRL is trading near $44 per share at the time of writing, down from a 12-month high around $49. Investors who buy CNQ at the current price can get a dividend yield of 5.3%.
Enbridge
Enbridge (TSX:ENB) is trading at $63 per share, up from $70 at the end of September. The pullback was expected after a stellar rally over the past two years, with ENB recovering from a slide that saw yields fall to $45 as the Bank of Canada and the U.S. Federal Reserve aggressively raised rates to combat inflation.
The recovery in stocks came after interest rates peaked and gained steam as central banks began cutting rates to support the economy. In the United States, further interest rate cuts are expected in 2026. This could give Enbridge new tailwinds.
Enbridge is working on a $35 billion capital plan that will increase adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and distributable cash flow by 5% per year from 2027. This should allow the board to maintain annual dividend growth. Enbridge has increased distribution for 31 years in a row.
In recent years, Enbridge purchased an oil export facility in Texas, acquired three U.S. natural gas companies and became a partner in the Woodfibre liquefied natural gas (LNG) export facility being built on the coast of British Columbia. The company has also expanded its renewable energy group. The diversification complements core oil and natural gas transmission infrastructure and spreads revenue risk.
Investors who buy ENB shares at the current price can get a dividend yield of 6.1%.
The bottom line
CNRL and Enbridge pay attractive dividends that are expected to continue growing. If you have some money to work on in a dividend portfolio, these stocks deserve to be on your radar.
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