Dividends & Decline: A Canadian Tale

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The vulgarity of modern finance insists upon quantifiable results. One hears pronouncements – “Dividends don’t lie!” – as if honesty were a mere accounting practice. Of course, figures can be…massaged. But a cheque, arriving or not, possesses a certain brutal finality. Since the turn of the millennium, the S&P 500 has, with tedious regularity, increased its payouts by some 376%. A respectable enough performance, though scarcely cause for champagne. It has, at least, outstripped inflation by a margin, which is more than can be said for most endeavours.

However, some companies have demonstrated a more…robust appetite for growth. Among these, Canadian Natural Resources (CNQ 0.17%) stands out, a Calgary-based firm engaged in the extraction of what remains of the earth’s more easily accessible resources. A pursuit, one might observe, with a limited shelf life.

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A Dividend History, Remarkably Uninterrupted

In 2001, Canadian Natural Resources deigned to distribute a dividend of $0.00625 per share. A pittance, naturally. This was promptly tripled within five years, a feat of financial engineering that suggests either exceptional foresight or a particularly favourable market. By 2011, the dividend had swelled by 620% since that initial offering, and by 2021, it had mushroomed by a further 553% from the 2011 levels. A truly baroque performance. Today, quarterly payouts are precisely double what they were five years ago. A steady climb, one might say, though the inevitable plateau looms.

Since 2001, the company has not merely increased its dividend annually, but has done so at an average rate of 21%. A figure that, frankly, strains credulity in the current climate. I have, over the years, examined a considerable number of income-producing stocks, and I confess, I have rarely encountered such sustained, almost defiant, growth.

The Question of Sustainability

Canadian Natural Resources generated an operating cash flow of $14.8 billion last year, which, with admirable efficiency, covers the $3.6 billion required to maintain its current dividend. Indeed, it could, theoretically, increase payouts by another 21% in 2026 and still retain over $10 billion in operating cash flow. A comforting thought, though one should not mistake abundance for permanence.

The spectre of an energy glut, naturally, hangs over the proceedings. But the company can remain profitable so long as oil prices remain above $21 per barrel, thanks to its industry-leading operating costs. A low threshold, to be sure, but one that feels increasingly precarious. Even if growth were to falter, the current dividend yield of 4.3% remains almost quadruple the S&P 500 average. For investors seeking a fast-growing, dependable income stream – a diminishing breed, admittedly – Canadian Natural Resources warrants consideration. Though one should approach it, as one approaches all such ventures, with a healthy dose of skepticism and a well-stocked cellar.

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2026-02-11 01:12