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Canada is known for its endless natural resources. Hence, the energy and oil sectors have always been one of the prime driving factors behind its economy. Just like the resources, there are multiple options available when it comes to Canadian energy stocks.
50% of the Canadian stocks listed on TSX belong to energy, finance, and materials. In this article, there will be two energy stocks in focus. Let’s dive in and check if these two oil producers are worth investing in, given the volatile oil prices we’ve seen of late.
Suncor Energy (TSX:SU) is a leading Canadian energy company focusing on oil sands, offshore production, refining and a nationwide network of electric vehicle charging stations. They are committed to developing oil resources and supporting a low-emissions future through investments in renewable fuels and energy.
Shareholders of Suncor Energy may be concerned about the recent 20% quarterly decline in its share price. However, the stock has outperformed the market, delivering a 50% gain over the past three years, compared to the market’s 44% gain. Positive factors include earnings growth above the five-year average, low debt risk, and dividends well supported by earnings and cash flow.
Suncor Energy’s board of directors recently approved a quarterly dividend of $0.52 per share to be paid on September 25, 2023, to shareholders of record as of September 1, 2023. Additionally, on September 21, there was an exceptional increase in options trading for Suncor Energy when investors acquired 28,315 puts, a staggering increase of about 2,998% compared to the usual daily volume of 914 puts.
Cenovus Energy (TSX:CVE), a Canadian oil and gas company, is actively fighting climate change. The company has reduced their carbon footprint, invested in renewable resources and developed oil sands green projects, such as Christina Lake and Foster Creek, using innovative technologies to reduce emissions.
Cenovus also has a stake in the Jenner Wind Project, a 150-megawatt wind farm in Alberta that contributes to emissions reductions. The key strategy is reducing emission intensity by 30% by 2030, achieved through investments in technology and renewable resources.
In addition, the provincial government is investing $7 million in a Cenovus study of small modular reactors for the future use of oil and petroleum products, demonstrating the industry’s reinvestment in emissions innovation from the TIER fund.
Cenovus and Suncor are excellent choices for investors looking for long-term holdings in the oil and gas sector. These are companies that are working to transition toward cleaner energies over the long term but still provide near-term cash flow growth to support significant dividend yields and capital reinvestment.