Suncor Energy (TSX:SU)(NYSE:SU) is one of the top oil and gas companies in North America and it also pays investors a high dividend. It has been rallying lately on geopolitical uncertainty in the Middle East and rising oil prices.
And the stock still looks like a fairly compelling buy. It’s trading at just 11 times its trailing earnings, and even on a forward basis that rises to only 14, providing investors with some good value. And its dividend currently yields 4.3%, which is far higher than what the average S&P 500 stock pays, which is around 1.3%.
The company has also been increasing its payout for years. Its current quarterly dividend payment of $0.57 has risen by more than 21% from the $0.47 the company was paying just three years ago.
Its earnings can be volatile due to changing commodity prices but this has generally been one of the safer oil and gas stocks to own over the years. In each of the past three years, the company has turned a strong profit of at least $6 billion. And over the trailing 12 months, its profit margin was solid at more than 11% of revenue. During that stretch, it also generated over $9 billion in free cash flow, which is easily enough to cover its cash dividend payments, which totaled $2.8 billion over that period.
With strong financials, a great dividend, and a potential to perform well amid economic uncertainty and geopolitical pressures, Suncor can be one of the better dividend stocks to buy and hold today.
