Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) is one of the most discussed Canadian energy companies out there, and for good reason. One of the key reason many investors have flocked to this company in recent months is the company’s high single digit dividend yield.
This yield looks more attractive in an environment where commodity prices appear to be finding a floor and investors are searching for the highest quality companies in each sector with the best balance sheets as a way to combat uncertainty.
The energy sector itself is one many investors, myself included, are not bullish on over the long-term for a myriad of reasons. That said, there are always value opportunities and companies with undervalued long-term potential that become attractive as a result of such sector-wide selling, and I do believe Canadian Natural to be on that list in the Canadian oil patch.
Canadian Natural’s ability to grow its cash flows over time has provided a strong thesis for ownership and has resulted in a balance sheet that is among the best of its peers on a relative basis.
Because the company has so aggressively invested in its capital program in the past, current investors benefit from lower long-term capital needs moving forward and better projected cash flows, even in a relatively low commodity price environment.
Canadian Natural has some of the best operating and valuation metrics in the sector and is as defensive a name one can own in this space, making its dividend attractive in my view.
Invest wisely, my friends.
