Canadian oil and gas stocks have faced a rollercoaster ride over the past few years.
However, analysts remain optimistic about the sector, and there are signs that oil and gas companies in Canada may be in a multi-year bull market. The top oil and gas stocks on the TSX and TSXV have been posting gains despite volatile market conditions, and many companies offer strong payouts for dividend investors.
Canadian energy stocks that pay dividends — a portion of corporate profits shared on a specific timeline — are attractive to those who prefer a long-term approach to wealth creation. Dividend investing allows for a steady flow of income and the opportunity to increase equity holdings.
Investors should look for stocks with high dividend yields, which is based on annual dividend income per share divided by price per share. For example, if a dividend stock has a share price of C$10.00 and pays a C$0.25 dividend every quarter, it has a dividend yield of 10 percent. Of course, as share prices fluctuate, so too will dividend yields, so investors should perform due diligence when choosing which company to invest in.
The ability to offer a dividend payment points to the financial health of a company, making it a point of pride for companies in the oil and gas industry.
1. Cardinal Energy (TSX:CJ)
Dividend yield: 11.03 percent
Debt-to-equity ratio: 0.09
Market cap: C$1.04 billion
Cardinal Energy is an oil-focused company with operations centered on low-decline light, medium and heavy oil in Western Canada. The company reported that its Q2 production increased by 3 percent over the previous quarter to 22,376 barrels of oil equivalent per day (boe/d) ‘as volumes from the company’s strong first quarter drilling program positively impacted the quarter.’
Cardinal Energy pays a monthly dividend of C$0.06 per share. Its October dividend will be paid on November 15 to shareholders of record as of October 31.
2. Gear Energy (TSX:GXE)
Dividend yield: 10 percent
Debt-to-equity ratio: 0.06
Market cap: C$158.16 million
Next on this list of top Canadian oil and gas dividend stocks is Calgary-headquartered Gear Energy, an oil company focused on operations in three core areas: Lloydminster heavy oil, Central Alberta light-medium oil and Southeast Saskatchewan light oil.
The company reported Q2 production of 5,621 boe/d, a 2 percent decrease over the first quarter of 2024 ‘due to the shut-in of some of the Company’s gas wells as well as some unexpected downtime.’ Gear Energy pays a monthly dividend of C$0.005 per share, with its next payment coming out October 31 to shareholders of record as of October 15.
3. Birchcliff Energy (TSX:BIR)
Dividend yield: 9.17 percent
Debt-to-equity ratio: 0.22
Market cap: C$148.45 million
Birchcliff Energy is an intermediate oil and natural gas firm with operations focused on the Montney/Doig resource play in the Peace River Arch area of Alberta, Canada.
“We continued with the successful execution of our capital program in the second quarter, bringing 11 wells on production. These wells are exceeding our internal projections, with strong initial production rates that contributed to our solid quarterly average production of 78,358 boe/d,” said Birchcliff CEO Chris Carlsen in a recent press release.
Birchcliff has declared a quarterly cash dividend of C$0.10 per common share for the quarter ending on September 30.
4. Peyto Exploration & Development (TSX:PEY)
Dividend yield: 8.63 percent
Debt-to-equity ratio: 0.50
Market cap: C$265.65 million
Peyto Exploration & Development conducts unconventional natural gas exploration, development and production in the Deep Basin in Alberta. The company reported that its Q2 2024 production volumes averaged 122,299 boe/d, up 24 percent year-over-year, which it attributed mainly to the Repsol Canada Energy Partnership acquisition that closed in Q4 2023.
Currently, Peyto pays its shareholders a monthly dividend of C$0.11 per common share, and plans to make a dividend payout on November 15 to shareholders of record as of October 31.
5. Surge Energy (TSX:SGY)
Dividend yield: 7.99 percent
Debt-to-equity ratio: 0.29
Market cap: C$621.74 million
Last on this list of top Canadian oil and gas dividend stocks is Surge Energy, an oil-focused exploration and production company with assets in two of Canada’s premiere conventional oil growth plays: Sparky and SE Saskatchewan.
In its financial and operating results for the period ending June 30, 2024, the company reported that in the first six months of the year, oil production reached 20,124 barrels per day.
Surge Energy pays a monthly cash dividend, which has come in at C$0.043 per share since June 2024, up from C$0.04 previously. On November 15, the company will make its next dividend payout to shareholders of record as of October 31.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.