The Canadian stock market witnessed a spectacular rally in the fourth quarter of 2023 as easing inflationary pressures raised the possibility that central banks in the United States and Canada will soon start cutting interest rates, which could improve economic growth. However, recently released hotter-than-expected consumer inflation data, especially from the United States, have reignited the concerns that the Fed may keep interest rates elevated for longer than earlier expected.
As these concerns keep the market volatile in 2024, it could be a wise decision for long-term investors to double up on some quality dividend stocks. Dividend stocks usually not only act as a reliable source of passive income but also protect your invested capital from sudden market ups and downs. When you put the dividend income back into your investment, you can increase your returns and build your wealth over time.
In this article, I’ll talk about two rallying dividend stocks that you can double up on right now and expect to receive a steady income for years to come. Let’s begin.
Headwater Exploration stock
Headwater Exploration (TSX:HWX) is the first stock you may consider doubling up on, as it offers both growth and dividend potential. This Calgary-headquartered energy company is mainly focused on operating its heavy oil reserves in Marten Hills, which have a low-cost structure and a long reserve life. The firm currently has a market cap of $1.8 billion, as its stock trades at $7.43 per share after surging by more than 21% so far this year. At this market price, HWX stock offers an attractive 5.3% annualized dividend yield.
In the December 2023 quarter, Headwater’s production reached a record 19,939 barrels of oil equivalent per day, reflecting a solid 28% YoY (year-over-year) increase. Similarly, its adjusted funds flow from operations also jumped to a record of $82 million.
As it continues to focus on the strategic expansion of land assets and successful drilling operations, Headwater’s growing heavy oil production and reserves are likely to accelerate its financial growth further, which could help the share prices of this dividend-paying company continue rallying.
Suncor Energy stock
Another Canadian dividend stock that has been rallying of late is Suncor Energy (TSX:SU). In the last three years, SU stock has gone up by nearly 78%, outperforming the broader market by a big margin. This oil and gas company currently has a market cap of $63.3 billion as its stock trades at $49.16 per share with nearly 16% year-to-date gains. It offers a decent 4.4% annualized dividend yield at the current market price.
In 2023, Suncor’s total upstream production stood strong at 745,700 barrels of oil equivalent per day as its combined upgrader utilization reached a record of 92%. Despite that, its revenue for the year slipped 13.4% YoY to $50.7 billion last year due partly to weaker commodity prices. In the last few months, however, crude oil prices have staged a handsome recovery, which should boost Suncor’s financial performance in the coming quarters.
Moreover, Suncor’s diversified operations and strong financial health make it a very reliable dividend stock to hold for the long term.
