Top 5 Canadian Oil and Gas Dividend Stocks in 2023

Canadian oil and gas stocks have faced a rollercoaster ride over the past few years.

However, analysts remain optimistic about the sector, and there are signs that oil and gas companies in Canada may be in a multi-year bull market. The top oil and gas stocks on the TSX and TSXV have been posting gains despite volatile market conditions, and many companies offer strong payouts for dividend investors.

Canadian energy stocks that pay dividends — a portion of corporate profits shared on a specific timeline — are attractive to those who prefer a long-term approach to wealth creation. Dividend investing allows for a steady flow of income and the opportunity to increase equity holdings, and requires stocks with high dividend yields.

The ability to offer a dividend payment is a point of pride for companies in the oil and gas industry. “The dividend yield is a financial ratio that represents the dividend income per share, divided by the price per share,” as per Investopedia. “It is considered a sign of clear financial health and confidence for a company to pay out dividends.”

1. Tethys Petroleum (TSXV:TPL)

Company Profile

Market cap: C$80.66 million; dividend yield: 16 percent; debt-to-equity ratio: 0.08

Oil and gas explorer and producer Tethys Petroleum is engaged in activities in Central Asia and the Caspian region, mainly in Kazakhstan.

Tethys pays a quarterly dividend of C$0.03 per share. its dividend payment is well covered by earnings. The company’s oil production in Q1 2023 averaged 370 tons per day. Production in May increased to about 650 tons per day.

2. Gear Energy (TSX:GXE)

Company Profile

Market cap: C$258.08 million; dividend yield: 12.5 percent; debt-to-equity ratio: 0.08

Calgary-headquartered Gear Energy is an oil company focused on operations in three core areas: Lloydminster heavy oil, Central Alberta light-medium oil and Southeast Saskatchewan light oil.

The company reported Q1 2023 production of 5,952 barrels of oil equivalent per day (boe/d), a 4 percent increase over Q1 2022 and a 3 percent increase over Q4 2022. Gear Energy pays a monthly dividend of C$0.01 per share, with its next payment coming out June 30, to shareholders of record as of June 15.

3. Peyto Exploration & Development (TSX:PEY)

Company Profile

Market cap: C$1.92 billion; dividend yield: 12.05 percent; debt-to-equity ratio: 0.36

Next on this list of top Canadian oil and gas dividend stocks is Peyto Exploration & Development, which conducts unconventional natural gas exploration, development and production in the Deep Basin in Alberta, Canada.

Currently, Peyto pays its shareholders a monthly dividend of C$0.11 per common share; according to the company, ‘over the past 10 quarters, Peyto has increased production from 78,200 boe/d to 102,900 boe/d, returned $183.5 million of dividends to shareholders, while reducing net debt by $300 million,’ a press release states.

4. Cardinal Energy (TSX:CJ)

Company Profile

Market cap: C$1.12 billion; dividend yield: 10.54 percent; debt-to-equity ratio: 0.05

Cardinal Energy is an oil-focused company with operations centered on low-decline light, medium and heavy oil in Western Canada. The company reported that its Q1 2023 production increased by 5 percent over Q1 2022 ‘due to ongoing strong base performance and excellent 2022 drilling results across our asset base.’

Cardinal Energy pays a monthly dividend of C$0.06 per share. The May dividend will be paid on June 15 to shareholders of record as of May 31.

5. Birchcliff Energy (TSX:BIR)

Company Profile

Market cap: C$2.09 billion; dividend yield: 10.44 percent; debt-to-equity ratio: 0.09

Last on this list of top Canadian oil and gas dividend stocks is Birchcliff Energy. The company is an intermediate oil and natural gas firm with operations focused on the Montney/Doig Resource Play in the Peace River Arch area of Alberta.

“In Q1 2023, we generated adjusted funds flow of $88.7 million, with average production of 74,592 boe/d. In addition, we returned an aggregate of $53.4 million to shareholders in Q1 2023 through our base common share dividend,” stated Birchcliff CEO Jeff Tonken in a recent press release. Birchcliff has declared a quarterly cash dividend of C$0.20 per common share for the quarter ending June 30.

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

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