Canadian Natural Resources: Biggest Dividend Increase In History, Plenty More Coming

Summary

• Canadian Natural Resources started 2022 by providing their biggest dividend increase in history.
• Thanks to the strong oil prices during 2021, they produced a record amount of free cash flow and reached their C$15b debt target.
• This now sees them moving to the next phase of their capital allocation strategy that sees much higher shareholder returns.
• If oil prices keep holding around $100 per barrel, my estimations place their shareholder yield on current cost for 2022 at a very high circa 14%.
• Since their leverage is very low, they are likely to further increase their shareholder returns relatively higher and thus I believe that maintaining my buy rating is appropriate.

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Introduction

When last discussing Canadian Natural Resources (NYSE:CNQ), my previous article focused upon how the rise of ESG investing actually means higher dividends in the medium to long-term despite their heavy focus on oil

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.