Valued at a market cap of over $90 billion, Canadian Pure Sources (TSX:CNQ) is among the many largest oil and fuel corporations on this planet. Whereas CNQ is a part of a cyclical sector, it has delivered market-beating returns to long-term shareholders.
The Canadian vitality large has returned 180% to shareholders within the final 10 years. If we alter for dividend reinvestments, the cumulative acquire is nearer to 340%.
In November 2025, the TSX vitality inventory is down 22% from all-time highs, permitting you to purchase the dip and profit from a ahead yield of 5.5%. Let’s see why Canadian Pure Sources inventory is an effective purchase proper now.
Is CNQ inventory purchase proper now?
Canadian Pure Sources posted spectacular second-quarter outcomes, pushed by stellar operational efficiency amid a difficult macroeconomic setting.
Within the June quarter, CNQ produced 1.42 million barrels of oil equal (BoE) per day, regardless of deliberate upkeep that briefly decreased output by 120,000 BoE per day. Manufacturing in July rebounded sharply with oil sands mining and upgrading operations averaging 602,000 barrels per day at a powerful 106% upgrader utilization fee.
The corporate accomplished two important acquisitions that instantly enhance money move and add substantial drilling stock. The Palliser Block acquisition, which closed in late June after regulatory delays, introduced 50,000 barrels per day of manufacturing and 850 high-quality mild oil drilling areas.
In early July, Canadian Pure acquired liquids-rich Montney property close to Grand Prairie for $750 million, which is predicted to contribute 32,000 barrels of oil equal each day and add 150 further drilling areas. Mixed, these offers add roughly 1,000 areas to the event pipeline whereas sustaining unchanged capital steerage for the 12 months.
Administration demonstrated spectacular price self-discipline throughout operations. The just lately acquired Duvernay property are performing higher than anticipated, with working prices dropping to $8.43 per barrel within the second quarter, a 11% lower from the primary quarter. This interprets to $60 million in annual financial savings in comparison with preliminary targets.
Drilling and completion prices per nicely have improved 16% on a length-normalized foundation, with additional good points of $200,000 per nicely versus first-quarter ranges.
The corporate generated $3.3 billion in adjusted funds move and returned $1.6 billion to shareholders by way of $1.2 billion in dividends and $400 million in buybacks through the quarter. 12 months-to-date shareholder returns reached $4.6 billion by way of early August, and web debt remained manageable at just below $17 billion, with a powerful stability sheet displaying 0.9 occasions debt-to-earnings earlier than curiosity, taxes, depreciation, and amortization and over $4.8 billion in liquidity.
Canadian Pure maintains its industry-leading breakeven within the low to mid-$40 per barrel WTI vary. Administration expects related complete shareholder returns in 2025 in comparison with 2024 regardless of allocating solely 60% of free money move to distributions versus 100% final 12 months, which displays confidence within the accretive nature of latest acquisitions and natural development alternatives throughout the diversified asset base.
Is the TSX dividend inventory undervalued?
Canadian Pure Sources has elevated its annual dividend from $0.48 per share in 2016 to $2.13 per share in 2024. On this interval, its efficient yield has risen from 3% to virtually 7%.
Analysts monitoring CNQ inventory forecast adjusted earnings to broaden from $2.85 per share in 2024 to $7.71 per share in 2029. On this interval, its annual dividend is forecast to broaden from $2.13 per share to $2.60 per share.
If the TSX dividend inventory is priced at 10 occasions ahead earnings, it may return 75% to shareholders throughout the subsequent 4 years. After adjusting for dividends, cumulative returns might be nearer to 100%.
