We recently published a list of the 10 Safe Dividend Stocks with Yields Above 5%. In this article, we are going to take a look at where Canadian Natural Resources Limited (NYSE:CNQ) stands against other safe dividend stocks.
Dividend-paying stocks have long held a special place among investors, often delivering stronger returns than the broader market over time. Within this strategy, there’s an ongoing debate between those prioritizing high yields and others who focus on companies with a steady track record of dividend growth. While analysts tend to favor firms that consistently boost shareholder payouts, the allure of high yields remains strong. Experts caution, however, that investors should avoid yield traps and instead target companies that combine attractive yields with reliable dividend increases.
A study by Newton Investment Management lends weight to the case for high-yield stocks. It found that during inflationary periods from 1940 to 2021, high-yield dividend stocks outpaced the broader market. The report also showed that portfolios with high-dividend-yielding stocks performed better than those with little or no dividend exposure. Specifically, high-yield portfolios outperformed low-yield portfolios by 199 basis points and zero-yield portfolios by 330 basis points in terms of value-weighted returns. However, the study didn’t explore the specific market conditions behind these results, offering more of a general overview.
Further backing the benefits of high-yield stocks, Hartford Funds conducted research looking at risk and return over the long haul. From December 1969 to March 2024, high-yield portfolios returned an average of 12.3% annually, compared to 10.5% for mid-yield and 9.7% for low-yield portfolios. When measured by annualized standard deviation—a common gauge of volatility—high-yield portfolios also showed lower risk (14.1%) than their mid-yield (16%) and low-yield (20.8%) counterparts.
Analysts note that dividend stocks can offer a layer of stability during market turbulence, especially when investors prioritize income. Still, they advise sticking to high-yield stocks only if they come with a proven record of dividend growth.
That said, this isn’t a hard rule. Many companies manage to offer both solid yields and consistent dividend increases. High yields, in themselves, aren’t a red flag—in fact, dividend yield plays a vital role in income-focused investing by showing the income potential relative to a stock’s price.
Amid the growing excitement around AI and tech stocks, dividend-paying companies have somewhat fallen off investors’ radar. However, the recent market downturn has brought them back into focus. Since the beginning of 2025, the Dividend Aristocrats Index, which tracks the performance of companies with 25 consecutive years of dividend growth, has fallen by over 2% while the broader market has slipped by nearly 10%.
Over the long haul, the strength of these dividend-focused stocks becomes even more evident. A report by S&P Global revealed that from January 2000 through February 2025, the Dividend Aristocrats Index outpaced its benchmark by an average of 1.59% annually. This consistent outperformance is largely credited to the solid fundamentals of the companies that make up the index.
A vast oil rig pumping crude oil during a sunset, emphasizing the company’s focus on oil & gas exploration and production.
Our Methodology:
For this list, we scanned Insider Monkey’s database of over 1,000 hedge funds as of Q4 2024 and picked dividend stocks with strong dividend policies and sound financials. From that group, we picked stocks that have yields above 5%, as of April 20. The stocks are ranked in ascending order of their dividend yields.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Canadian Natural Resources Limited (NYSE:CNQ)
Dividend Yield as of April 20: 5.69%
Canadian Natural Resources Limited (NYSE:CNQ) is a Canadian oil and natural gas company, having operations in Western Canada, the UK portion of the North Sea, and Offshore Africa. Analysts believe that the company is well-positioned to benefit from shifts in global oil demand and supply, thanks to its vast reserves and diversified asset base. However, its long-term performance will largely depend on external influences like trade policies and environmental regulations.
The year 2024 marked a significant milestone for Canadian Natural Resources Limited (NYSE:CNQ), as it reached a record-high average production of more than 1.36 million barrels of oil equivalent per day. This included its highest-ever annual liquids output, which topped one million barrels daily. Financially, the company outperformed expectations, posting adjusted earnings of C$2.34 per share in the fourth quarter, beating analyst forecasts of C$2.15.
Canadian Natural Resources Limited (NYSE:CNQ) also maintained a solid financial position. It generated over $3.4 billion in operating cash flow during the latest quarter, up from $3 billion previously, and ended fiscal 2024 with $4.5 billion in free cash flow. This strong cash generation enabled the company to return $1.7 billion to shareholders via dividends and stock buybacks.
In March, Canadian Natural Resources Limited (NYSE:CNQ) hiked its quarterly dividend by 4.4% to C$0.5875 per share. Through this increase, the company stretched its dividend growth streak to 25 years, which places it on our list of the best safe dividend stocks with yields above 5%. As of April 20, the stock has a dividend yield of 5.69%.
Overall, CNQ ranks 8th on our list of the safe dividend stocks with yields over 5%. While we acknowledge the potential of CNQ as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than CNQ but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
