Income-focused investors, including Tax-Free Savings Account (TFSA) users, have become more risk-averse than usual. Tariff threats from the Trump administration are massive headwinds in 2025. However, this does not mean that no TSX stock can shelter your TFSA in the wake of heightened market volatility.
The energy sector, for example, has displayed resilience notwithstanding the tightrope. Some analysts even say industry players have a lifeline in the Trans Mountain Pipeline. A solid pick for your TFSA is Suncor Energy (TSX:SU).
The oil bellwether’s 4.9% dividend yield ($2.28 annual dividend per share) isn’t the highest but should be sustainable in the current challenging environment and beyond. At $46.46 per share, the large-cap stock is down -8.5% year-to-date following a rocky first quarter.
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Natural hedge vs. tariffs
Rich Kruger, CEO of Suncor, is not worried about tariffs and the aggressive U.S. trade policy. The $57.5 billion integrated energy company has survived the oil price war and global pandemic in 2020. It has a stronger financial position today after resolving debt and operational issues and undergoing transformation.
Suncor’s business model, which includes exploration, production, and retail, is a natural hedge against U.S. tariffs. “If we were in a world of tariffs, I like our position relative to our peer group,” said Kruger. Between 60% and 65% of total production remains in Canada for refining or shipping off the British Columbia coast through the Trans Mountain Pipeline.
Kruger added, “We have a large Canadian refining footprint, and I believe among our peers, we have more capacity to get crude off of either coast.” Government-owned Trans Mountain, Canada’s strategic asset, transports crude oil and refined petroleum products. The pipeline system can funnel crude to Asia and Europe to avoid the tightrope.
Besides oil sands development, offshore oil production, and petroleum refining, Suncor owns Petro‑Canada. Canada’s Electric Highway, a coast-to-coast network of fast-charging electric vehicle stations, is part of its retail and wholesale distribution networks.
Performance records in 2024
In Q4 2024, net earnings declined nearly 71% to $818 million compared to Q4 2023. Still, Kruger said, “Suncor’s fourth quarter was about finishing an exceptional year strong and building momentum for 2025.” Cash flow provided by operating activities during the quarter rose 18% year-over-year to $5.1 billion.
According to Kruger, Suncor set performance records in upstream production, refining throughput, refined product sales, and asset utilization across the company in Q4 and full-year 2024. For the year, upstream production reached a record 827,600 barrels per day (upgrader utilization of 98%). The 100% refinery utilization resulted in a record refining throughput of 465,000 barrels daily.
The refined product sales of 613,300 barrels per day in the fourth quarter erased the previous record set in the third quarter. Suncor reduced net debt by 14% to $6.9 billion versus Q3 2024. Also, the Board approved a 5% quarterly dividend increase. Notably, Suncor has moved to return 100% of excess funds to shareholders via share repurchases after hitting the $8 billion net debt target.
Free funds flow target
Suncor Energy offers an attractive and relatively safe quarterly dividend (46.7% payout ratio) to TFSA investors. Kruger notes Suncor’s significant progress towards achieving its normalized free funds flow target of $3.3 billion in 2026.
