Are These the 3 Best Oil Stocks After Last Week’s Bloodbath?

Enbridge Inc. (TSX:ENB)(NYSE:ENB) is a solid buy today, while a competitor may be losing ground to another major energy stock.

| More on:

Oil stocks have long been viewed as the more volatile arm of the energy sector, but even with the added risk, they have remained a central part of dividend investment. However, their behaviour on the TSX last week showed just how vulnerable the oil sector is to even a moderate confluence of market stressors.

While some pundits are gravely concerned about the U.S.-China trade war, the worst could be yet to come. Some pundits have expressed concerns that the trade war could become something larger, extending to other areas beyond trade. Add to this the possibility for a truly severe oil bottleneck rather than the mere treat of one and a black swan event almost seems like an inevitability.

With this in mind, let’s take a look today at three of the biggest oil-weighted energy stocks on the TSX and see which of them is best suited to a place in a long-term dividend portfolio.

Enbridge (TSX:ENB)(NYSE:ENB)

Known for its mix of natural gas and oil pipelines and strong presence across the country, this is a TSX index mega-stock. Up 0.26% to $49.76 at writing, Enbridge got whacked with the low oil stick last week, but somehow managed to turn it around over the weekend.

One of the lowest volatility oil-weighted stocks, Enbridge boasts a relatively insulated 36-month beta of 1.07. It’s also not badly priced, with a P/E of 23.4 times earnings and P/B of 1.6 times book. In terms of passive income, a dividend yield of 5.62% is on the higher end of the scale, while year-on-year returns of 22.97% mean that this stock has still got it where it counts.

Suncor Energy (TSX:SU)(NYSE:SU)

A firm favourite with energy investors, Suncor Energy is nevertheless in danger of having its crown stolen from it by the next stock on today’s list. Suncor Energy battled fiercely last week, as lower oil and market fears roiled the energy sector. At one point, Suncor had a five-day gain of 1.13%, only to find its five-day average negative by 0.38% over the weekend.

It’s more attractively priced than Enbridge, with a P/E of 17.1 times earnings and P/B of 1.5 times book, and while its dividend yield of 3.55% is lower, its outlook is solid, with an estimated earnings growth rate by the end of the fiscal year of 29.43%.

Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ)

With the purchase of the Canadian assets of Devon Energy, Canadian Natural Resources continues its canny strategy of buying assets that are physically close to its centre of operations. In 2014, Canadian Natural Resources bought out the same company’s conventional oil and gas assets. Then, two years ago, Canadian Natural Resources snapped up a 70% interest in Royal Dutch Shell‘s Athabasca Oil Sands Project as well as Marathon Oil.

The bottom line

Up 4.34% at the time of writing, Canadian Natural Resources is possibly the one stock to be looking at if you’re especially bullish on oil and want to invest in an improving stock. Attractively valued and occupying a stable position in the energy sector, Canadian Natural Resources seems well on its way to overtaking Suncor Energy to claim the oil sands throne.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »

young people stare at smartphones
Dividend Stocks

GST/HST “Vacation”: Everything Canadians Need to Know

The GST/HST "vacation" is a little treat for the holidays, along with a $250 payment. What should you do with…

Read more »

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »