Canada is renowned for its abundance of natural resources, and the oil sector is definitely one of the primary sectors driving the Canadian economy. As such, investors have many options when it comes to energy stocks.
If you look at the TSX 60, 13 of the 60 stocks are energy stocks ( 21.67%) and the largest representation, followed by financials and materials with 10 each. Over 50% of the index is concentrated in the three primary sectors driving the Canadian economy.
If you invest in Canada, it’s important you understand the energy sector and what the company’s business is. Some of the industries are dependent on others. See the industry breakdown below, followed by the top Canadian energy stocks.
- Oil & Gas – Drilling
- Oil & Gas – E&P
- Oil & Gas – Integrated
- Oil & Gas – Midstream
- Oil & Gas – Services
- Oil & Gas – Refining & Marketing
With that said, don’t forget we may have reached peak oil, and the push for electric vehicles will change the landscape over time.
One of my primary data points when researching a stock includes the Chowder Rule, as it establishes the potential total return of the company in the short term for both the dividend and the stock appreciation. Find the right stock for your portfolio.
Best Energy Stocks
A word of caution: bigger isn’t necessarily better, but larger Canadian oil stocks could provide stability. Energy stocks also do not behave like Canadian bank stocks.
While all of these stocks are oil stocks, know what you want to own. Some energy stocks are pure play drilling, some are just about transport and others have a full vertical integration to the pump.
Ticker | Ticker | Company | Market Cap | P/E | Yield | Aristocrat | Graph | SectorID | IndustryID |
---|---|---|---|---|---|---|---|---|---|
ENB | TSE:ENB | Enbridge | 123.15 | 21.67 | 6.47 | YES | 1 | 5 | 71 |
CNQ | TSE:CNQ | Canadian Natural Resources | 110.02 | 14.67 | 4.35 | YES | 1 | 5 | 69 |
SU | TSE:SU | Suncor | 70.64 | 9.52 | 3.92 | NO | 1 | 5 | 70 |
TRP | TSE:TRP | TC Energy | 65.16 | 18.98 | 6.11 | YES | 1 | 5 | 71 |
IMO | TSE:IMO | Imperial Oil | 57.79 | 11.27 | 2.23 | YES | 1 | 5 | 70 |
CVE | TSE:CVE | Cenovus Energy | 45.57 | 9.78 | 2.93 | NO | 1 | 5 | 70 |
PPL | TSE:PPL | Pembina Pipeline | 34.12 | 18.04 | 4.69 | YES | 1 | 5 | 71 |
TOU | TSE:TOU | Tourmaline Oil | 23.06 | 15.47 | 2.14 | YES | 1 | 5 | 69 |
OVV | TSE:OVV | Ovintiv | 15.65 | 6.12 | 2.79 | NO | 1 | 5 | 69 |
ARX | TSE:ARX | Arc Resources | 14.78 | 12.78 | 2.74 | NO | 1 | 5 | 69 |
KEY | TSE:KEY | Keyera Corp | 10.07 | 29.69 | 4.73 | NO | 1 | 5 | 71 |
PSK | TSE:PSK | PrairieSky Royalty | 6.76 | 29.45 | 3.54 | NO | 1 | 5 | 69 |
WCP | TSE:WCP | Whitecap Resources | 6.61 | 8.82 | 6.61 | NO | 1 | 5 | 69 |
PKI | TSE:PKI | Parkland Corporation | 6.33 | 17.16 | 3.85 | YES | 1 | 5 | 72 |
VRN | TSE:CPG | Veren | 5.48 | 0.00 | 5.18 | NO | 1 | 5 | 69 |
TPZ | TSE:TPZ | Topaz Energy | 4.01 | 74.78 | 4.77 | NO | 1 | 5 | 71 |
GEI | TSE:GEI | Gibson Energy | 3.81 | 22.12 | 6.99 | NO | 1 | 5 | 71 |
PEY | TSE:PEY | Peyto Exploration & Development Corp. | 3.10 | 10.18 | 8.31 | NO | 1 | 5 | 69 |
VET | TSE:VET | Vermillion Energy | 2.19 | 0.00 | 3.42 | NO | 1 | 5 | 69 |
FRU | TSE:FRU | Freehold Royalties | 2.14 | 14.22 | 7.59 | NO | 1 | 5 | 69 |
ESI | TSE:ESI | Ensign Energy Services | 0.55 | 27.27 | 0.00 | NO | 1 | 5 | 68 |
BNE | TSE:BNE | Bonterra Energy | 0.15 | 4.05 | 0.00 | NO | 1 | 5 | 69 |
Finding An Undervalued Oil Stocks
It’s not easy to find an undervalued stock in this space. One way I use this is to assess the current yield against the 5-year average. The capital-intensive nature of the business and the crude oil prices mostly have an impact on future income as opposed to the valuation.
Cash flow is king with these companies, and their ability to profit from crude oil at a certain price is key.
Note that not all dividend stock screeners are created equal. Not many screeners focus on dividend data and dividend strength. You should consider a screener such as Dividend Snapshot Screeners.
While many of the big players go through seasons, CNQ has consistently shown up as one of the best Canadian dividend stocks based on a pure screening methodology.
Canadian Natural Resources
tse:cnq | Energy | Oil & Gas E&P- Grade: A+
- Market Cap: 110.02B (Large Cap)
- P/E: 14.67
- Dividend Yield: 4.35%
- Dividend Aristocrat: YES
- Dividend Growth Fit: 9/10
- Dividend Income Fit: 7/10
- Chowder Score: Members Only
- Revenue Growth: Members Only
- Dividend Growth: Members Only
Imperial Oil
tse:imo | Energy | Oil & Gas Integrated- Grade: A
- Market Cap: 57.79B (Large Cap)
- P/E: 11.27
- Dividend Yield: 2.23%
- Dividend Aristocrat: YES
- Dividend Growth Fit: 8/10
- Dividend Income Fit: 5/10
- Chowder Score: Members Only
- Revenue Growth: Members Only
- Dividend Growth: Members Only
Suncor
tse:su | Energy | Oil & Gas Integrated- Grade: B
- Market Cap: 70.64B (Large Cap)
- P/E: 9.52
- Dividend Yield: 3.92%
- Dividend Aristocrat: NO
- Dividend Growth Fit: 5/10
- Dividend Income Fit: 7/10
- Chowder Score: Members Only
- Revenue Growth: Members Only
- Dividend Growth: Members Only
Whitecap Resources
tse:wcp | Energy | Oil & Gas E&P- Grade: B
- Market Cap: 6.61B (Mid Cap)
- P/E: 8.82
- Dividend Yield: 6.61%
- Dividend Aristocrat: NO
- Dividend Growth Fit: 6/10
- Dividend Income Fit: 9/10
- Chowder Score: Members Only
- Revenue Growth: Members Only
- Dividend Growth: Members Only
Tourmaline Oil
tse:tou | Energy | Oil & Gas E&P- Grade: A
- Market Cap: 23.06B (Large Cap)
- P/E: 15.47
- Dividend Yield: 2.14%
- Dividend Aristocrat: YES
- Dividend Growth Fit: 8/10
- Dividend Income Fit: 4/10
- Chowder Score: Members Only
- Revenue Growth: Members Only
- Dividend Growth: Members Only