Dividend Stocks: This Canadian Energy Stock Offers Hot Growth, Growing Dividend

Canadian Natural Resources (CNQ) is a top dividend stock offering a long track record of dividend increases and hot growth — something not so common in dividend plays.

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Canadian Natural Resources — headquartered in Calgary, Alberta — is a natural gas and oil producer primarily operating out of Western Canada. The company also has offshore rigs in the North Sea and West Africa.

Hot commodity prices have been driving substantial growth. The company reported earnings of $6.25 per share last year, up substantially from the loss of 64 cents reported in 2020. Analysts are expecting EPS to increase to $9.57 this year.

Dividend Stock’s Impressive Track Record

Canadian Natural Resources has had a long track record of dividend increases that stretches back from a quarterly dividend of just 1.25 cents per share in 2001 to 75 cents today.

While energy prices, and therefore profits, have been volatile, the commitment to the dividend has been steadfast. An annualized yield of 4.1% is currently well above the 1.5% average of the S&P 500.

Canadian Natural has been able to increase natural gas production 30% year-over-year to benefit from higher prices. Strong profits led the company to announce a special $1.50 dividend (paid out last month). In the second quarter, Canadian Natural reduced its debt by $1.2 billion to $12.4 billion.

Management has set a goal of bringing debt down to $8 billion, at which point investors can expect even further increases to dividend payouts and share buybacks. This could leave investors with eye-watering yields if commodity prices remain elevated.

Highly volatile energy prices remain a principal risk to these targets, as does sizable debt. While reduced, debt remains somewhat elevated at current levels.

Shares of Canadian Natural Resources are trading well below new highs. But the dividend stock is trending higher and is trying to hold around its risingf 200-day moving average. Watch for a base to form.

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