Oil sands stocks are well-known growth and income picks for investors. Not only do stocks in this space offer long-life assets and strong cash flow, but they also boast dependable dividends.
A key reason for that is the low decline rates that keep production stable and reduce the need for heavy reinvestment. That level of stability keeps cash flow running irrespective of how the market is faring.
There’s no shortage of great picks to choose from among the oil sands stocks. For investors evaluating which oil sands stock is the better option right now, two clear leaders stand out.
Those companies are Suncor (TSX:SU) and Canadian Natural Resources (TSX:CNQ). Both remain among the most widely held TSX energy stocks for investors seeking stability.
Here’s a look at both of these oil sands stocks and why they belong in your portfolio.
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Suncor: Integrated strength and a focus on execution
Suncor benefits from its fully integrated business model. That allows the company to combine oil sands production with refining and a large retail network.
This not only makes this one of the top TSX energy stocks to consider but also offers defensive and income-earning potential, too.
Part of that defensive appeal stems from Suncor’s ability to smooth out earnings when oil prices swing. Refining margins can offset weaker crude prices, and the retail business adds another layer of stability.
Suncor has spent the years tightening operations, improving reliability, and cutting costs. Those efforts have supported its dividend and buyback program, which are key reasons why investors turn to the stock.
As of the time of writing, Suncor’s dividend carries a respectable 3.1% yield. The company has also provided investors with annual increases to that dividend for years.
For investors seeking a balanced energy stock with multiple revenue streams, Suncor is one of the oil sands stocks to consider owning.
Canadian Natural: The cash‑flow machine
Canadian Natural is another one of the oil sands stocks known for its efficiency. The company’s oil sands assets are renowned for having the lowest breakeven costs in the industry.
As a result, Canadian Natural consistently generates strong free cash flow irrespective of how oil prices are moving. Factor in Canadian Natural’s long-life assets and disciplined spending, and you have one of the most defensive, reliable energy dividends on the market.
Canadian Natural offers investors a quarterly dividend that currently offers 3.9%. That dividend is backed by over two decades of annual upticks, making it one of the best dividend growth picks in the Canadian energy sector.
For investors seeking reliable income and stable growth from the energy sector, Canadian Natural stock is hard to ignore.
Pick the oil sands stock for your portfolio
Both Suncor and Canadian Natural offer many of the same fundamentals but packaged somewhat differently.
Suncor’s fully integrated model offers stability and diversification within a balanced business model. When volatility arises, Suncor can pull levers in any of its vertically integrated parts to offset a slowdown. This makes the stock appealing to investors seeking stability and income.
Turning to Canadian Natural, the focus is on stable drawdowns that offer efficiency, high margins, and strong dividend growth. Investors who seek strong cash flow and dividend growth will lean towards Canadian Natural.
In short, both oil sands stocks offer a blend of growth and income that can anchor a well-diversified portfolio.