Written by Chris MacDonald at The Motley Fool Canada
In 2022, the Canadian energy sector was the only sector in Canada to finish that year in the green. Despite the rough patch that was felt worldwide due to tensions between Russia and Ukraine, Canada’s energy sector continued to offer value for money in 2022. Indeed, the primary driver behind this exceptional performance is impressive ongoing energy demand.
Most Canadian oil companies have decided to distribute dividend payments and invest in buybacks in 2023. That’s despite calls from government to invest in increasing supply. Thus, this sector should be one which is favorable to investors seeking capital return for some time to come.
Additionally, even though the market is shifting towards sustainable energy resources, analysts predict the oil industry will still be in demand in the foreseeable future. Here, I’m going to discuss two such oil stocks that have the potential for big returns in 2023.
Top oil stocks to buy in May: Suncor
Suncor (TSX:SU) is one of Canada’s leading integrated energy companies. This company deals in the development, manufacturing and production of oil sands, petroleum refining, and offshore gas and oil production all over the United States and Canada.
Suncor has been one of the top choices among investors due to its impressive dividend track record. Due to its excellent investment strategies, this company has been able to generate significant revenue growth, while buying back shares. Currently, it has pays out a dividend yield of 5.2%, which is pretty good if you take into consideration the payout ratio of 28.6%.
Suncor has recently announced its acquisition of the entire Canadian operations segment of TotalEnergies for $5.5 billion. The company will now have 100% ownership of Fort Hills, which means that it will get abundant bitumen supply over the long term, allowing the company to supply Base Plant upgraders in the Fort McMurray region at a reasonable cost.
Cenovus Energy (TSX:CVE) recently announced its first-quarter (Q1) results in 2023. Q1 results show less production in the upstream sector, lower commodity price, and lower operating output in the downstream when compared to its Q4 results in 2022.
Cenovus successfully restarted the Superior Refinery and introduced crude oil in the middle of March. The refinery is currently preparing for an increase in second-quarter product sales. Also, the company expects expect oil sands production to be stronger in the second half of 2023.
Like Suncor, Cenovus is a stock many investors watch for its dividend. The company recently increased its quarterly distribution by 33% this past quarter to $0.14 per common share. The company’s base dividend will rise to $0.56 annually, up from $0.42 per year. This will continue to be adjusted, according to how the market performs, and other factors, over the long term.
Before you consider Cenovus Energy, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in April 2023... and Cenovus Energy wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 4/18/23