Suncor Energy Inc. (TSX:SU)(NYSE:SU) has one of the biggest market caps on the TSX and the energy giant has a lot of potential upside for both capital appreciation and dividend income.
Year-to-date the stock has yielded returns have been around 2% but that could change as oil prices continue to climb. The dividend currently pays 2.8% per year and quarterly payments have increased 10% from a year ago. Suncor normally increases its dividend once per year, but there have been exceptions.
In five years, the dividend payments have increased 146%, for a compounded annual growth rate of 20%. If Suncor were to keep increasing its dividend payment at that rate then it would take less than four years for its quarterly payout to double. This makes Suncor a very attractive buy for the long term.
Although its yield may not be very high right now, owning it for years can make the payouts much more attractive. It’s certainly no guarantee that Suncor will continue to increase its dividend payments, but given the company’s strong history in doing so along with how stable and well the company has been performing, it appears to be a safe bet.
In its most recent quarter, Suncor posted a profit of $1.29 billion, and that is the second time its profit has been over $1.2 billion in the last three quarters. The company also continues to grow its top line with sales up 8% year-over-year.
Suncor is a great stock to add to your portfolio that will allow you to benefit from a rising share price over time as well as increasing dividend payments.