Then and Now – Canadian Natural Resources (CNQ)
Welcome to another Then and Now article, a continuation of my series where I revisit some older blogposts and either rip them to shreds (because my thinking has totally changed on such subjects) or I’ll confirm my position on various personal finance topics or some specific stock and ETF investments.
Today’s post is about a dividend favourite with many DIY investors in Canada: Canadian Natural Resources (CNQ).
You can read a few previous Then and Now posts on certain stocks (good and bad!) at the end of this post.
Then and Now – Canadian Natural Resources (CNQ)
I started writing about owning CNQ back in 2012.
At that time, I was ramping up my DIY stock portfolio.
I owned a few Canadian banks at the time along with a couple of U.S. stocks but I was looking to diversify further…
Coming out of the Great Financial Crisis (GFC) I figured it was prudent to not only pay down our mortgage debt (while borrowing costs were low) but also keep investing at the same time.
I/we had a financial plan, then, for what I thought would be some prolonged low interest rates. From 2012:
“I’m no financial guru but I see this prolonged low interest rate environment as a short-term blessing to solidify my financial plan.
Pay down debt and make steady investment contributions. A simple two-step dance that is bound to help us realize our 7-figure portfolio dreams (without debt) in the coming years.”
Just before writing that post, I initiated my position in CNQ. CNQ was held to diversify away from Canadian banks at the time. I also felt we needed to add more energy assets to our portfolio beyond my very first stock: Enbridge purchased a few years earlier.
For some partial validation, CNQ made this list of top-performing stocks from 2013.
Again, I figured CNQ would be a great addition to the portfolio given they were expanding beyond Canada (across North America) and were growing operations in the U.K. North Sea, and Africa.
They had also demonstrated their ability to pay growing dividends. 🙂
CNQ has been in growth-mode for some time.
With the pandemic to be (eventually) declared over, I collaborated with the guys at Stocktrades.ca on this post that included CNQ as a top-pick for some potential post-pandemic results.
Based on any recent purchases over the last few years, shareholders like myself have been rather happy.
Investors who have owned CNQ stock before, during and after the pandemic have benefitted from the company’s recent massive dividend hikes, including a 28% special raise in 2022. In 2022, CNQ actually increased dividends twice by 45% as oil prices surged to multi-year highs.
Canadian Natural’s growing and sustainable dividend is a testament to its operational stability.
I actually bought more CNQ in 2022.
This spring, 2023, CNQ reported a free cash flow of $1.4 billion (after dividends).
The company shared in a release:
“With ample liquidity on our balance sheet, we can add production with minimal capital while generating significant returns on capital and maximizing shareholder value.”
And it could get better later this year for all CNQ shareholders…
Canadian Natural Resources aims to distribute 100% of free cash flow once its net debt reaches below $10 billion. It ended 2022 with a net debt of $10.5 billion.
CNQ’s long-life assets with its ability to generate sustainable cash flows make it a mainstay in our portfolio.
In the chart below, I’ve compared CNQ returns to one of my favourite low-cost ETFs: XIU since 2012.
Source: Portfolio Visualizer
Along with the other stocks I own in our portfolio, in other sectors, I continue to believe our basket of Canadian stocks, with some U.S. stocks, and then indexed ETFs should deliver a nice mix of growing income and capital gains over time.
You can always check out a few stocks and ETFs we own in the dedicated pages below and why:
Then and Now – Canadian Natural Resources (CNQ) Summary
While some might argue our pipeline stocks could be in trouble…more reading below…CNQ continues to generate LOTS of free cash flow that should continue to reward shareholders as oil prices stay modest/where they are or climb even higher.
This is a good time to remind you that because ALL individual stocks have investing risk and introduce portfolio risk, if you do decide to become a DIY investor and own individual stocks as part of your process, then consider my “5% rule”. That means I try to keep any one stock in our portfolio to about 5% of our portfolio value (or less) – although I am fine if my ETF holdings go beyond 5% of my overall portfolio value over time thanks to the diversification benefits they provide. In fact, they likely will…
With some big-time investors shorting the U.S. stock market of late and famous billionaires hoarding more cash in their portfolios (i.e., Warren Buffett), there is talk of a much anticipated market crash this fall given only a handful of U.S. stocks are even driving market returns.
“Michael Burry made a name for himself by shorting the market to the point where they made a movie about him called “The Big Short.” But is he preparing for a time when lightning will strike twice? Recent moves in his portfolio suggest as much and in a very big way. The news began, as news seems to these days, on Twitter. Michael Burry Stock Tracker noted a major move in Michael Burry’s Scion Asset Management portfolio, as he bought a massive quantity of put options in two major market-tracking funds: the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ).”
“Warren Buffett’s company reported that it now sits on $130.6 billion in cash from $128 billion in the fourth quarter of 2022, according to Edward Jones, citing Berkshire Hathaway company data. This announcement left investors wondering where Buffett might deploy his stockpile.”
I will continue to own a bit of CNQ along with my other companies, and ETFs, and some cash too (!) and simply see what happens.
Selected Then and Now posts and stock ownership:
As promised above, you can see some of the stocks I’ve been buying and holding, or not (!), over the decades below. I welcome your thoughts and feedback on any of these stock selections and holding periods – happy to discuss anytime!
I own a bit of BlackRock (BLK) stock in my portfolio and have done so for many years.
I posted my update with TD Bank (TD) here after more than a decade of stock ownership.
This was my update about owning Telus (T).
I enjoy owning low-volatility, higher growth stocks like Waste Connections (WCN).
I’ve owned Canadian National Railway (CNR) since 2016.
But not every purchase is a good one! Read on…
Disclosure: None of these stocks, including CNQ, are recommendations for purchase. You are responsible for your investment decisions.