Most investors likely won’t think of natural gas stocks when they look at Canadian utilities or energy stocks.
Natural gas is usually overshadowed by large sectors like oil and mining on the Toronto Stock Exchange. Canada is a resource-rich country with plenty of precious metals miners and oil producers to invest in.
Canadian investors who are looking for price stability and steady dividend yield should look at adding some natural gas stocks to their portfolios.
In this article, I’ll discuss the 10 top natural gas stocks to buy in Canada in April 2024.
What are Natural Gas Stocks?
You can invest in several different areas of the Canadian natural gas sector. These companies include transport, production, and natural gas services.
Natural gas is a popular source of heating and electricity in both residential and consumer buildings. It is important to note that natural gas is still a fossil fuel, and it is not considered a clean or renewable energy source.
As of 2023, Canada sits sixth in global natural gas production. It is behind only the United States, Russia, Iran, China, and Qatar. It has about a 4.0% share of the global natural gas market and produced 165.2 BCM (billion cubic metres) in 2022.
Here are the 10 Top Canadian Natural Gas Stocks I will be discussing in this article:
- Enbridge (TSE: ENB)
- Canadian Utilities Limited (TSE: CU)
- Canadian Natural Resources Ltd (TSE: CNQ)
- Cenovus Energy (TSE: CVE)
- ARC Resources (TSE: ARX)
- TC Pipelines LP (TSE: TRP)
- Pembina Pipeline Corp (TSE: PPL)
- Suncor Energy (TSE: SU)
- Fortis (TSE: FTS)
- Imperial Oil (TSE: IMO)
All facts and figures are as of MNarch 2023.
Best Natural Gas Stocks To Buy in Canada
1. Enbridge (TSE:ENB)
Here are some key facts for ENB.TO:
- Market Cap: $101 billion
- 52-week Trading Range: $48.88 – $59.69
- PE Ratio: 39.44
- Dividend Yield: 7.05%
- 5-year performance: 26.25%
Enbridge is an oil and gas pipeline company established in 1949 and based out of Calgary, Alberta.
It operates the longest network of pipelines in North America, of which 38,300 km are for transporting natural gas.
By 2040, the company anticipated having a greater than 30% market share of North America’s LNG exports.
This stock pays one of the highest sustainable dividend yields on the TSX and increased it by a further 3.0% in 2022. The current annual yield sits at an impressive 7.05%.
2. Canadian Utilities Limited Class A (TSE: CU)
Here are some key facts for CU.TO:
- Market Cap: $9.82 billion
- 52-week Trading Range: $33.24 – $41.94
- PE Ratio: 17.62
- Dividend Yield: 4.93%
- 5-year performance: 5.26%
Canadian Utilities is a Calgary-based energy and utilities company formed in 1927. It has an interesting corporate structure in that it is an organization of different companies that provides energy infrastructure and services to over 2 million customers worldwide.
One of Canadian Utilities’ largest divisions is energy infrastructure which includes natural gas transmission and distribution.
This stock has the longest track record of annual dividend increases among any publicly traded Canadian company. It has raised its dividend for 51 consecutive years.
3. Canadian Natural Resources Ltd (TSE:CNQ)
Here are some key facts for CNQ.TO:
- Market Cap: $79.1 billion
- 52-week Trading Range: $57.54 – $86.37
- PE Ratio: 7.56
- Dividend Yield: 5.10%
- 5-year performance: 59.36%
Canadian Natural Resources is a Calgary-based senior crude oil and natural gas company established in 1973.
The company is one of the largest natural gas producers in Canada, with a primary customer focus in Western Canada.
CNQ owns 28 gas facilities across Western Canada and an integrated pipeline that delivers natural gas around the region.
It is always seeking out new projects and is currently in the process of adding the Montney and Deep Basin projects to its expansive portfolio.
4. Cenovus Energy (TSE:CVE)
Here are some key facts for CVE.TO:
- Market Cap: $31.22 billion
- 52-week Trading Range: $14.44 – $24.91
- PE Ratio: 6.98
- Dividend Yield: 1.89%
- 5-year performance: 73.61%
Cenovus is often seen as an oil company, but it also operates in the natural gas industry in its home city of Calgary, Alberta.
With project sites across Alberta and British Columbia, Cenovus has established itself as an oil and natural gas leader.
It pays a 1.89% annualized dividend yield, which the company tripled during the year 2022.
With a Total Reserves Life Index of 29 years and an annual capacity of over 795 million BOE/d (Barrels of Oil/Day), Cenovus is positioned to be an industry leader for decades to come.
5. ARC Resources (TSE: ARX)
Here are some key facts for ARX.TO:
- Market Cap: $9.4 billion
- 52-week Trading Range: $13.65 – $22.88
- PE Ratio: 4.37
- Dividend Yield: 3.96%
- 5-year performance: 6.98%
ARC Resources is a Calgary-based company that was founded in 1996.
This company transports natural gas to the west coast of Canada and the US Gulf Coast, as well as having LNG distribution agreements with companies like LNG Canada, Cheniere, and Cedar LNG.
Much of ARC’s operations are focused in the Motney region of Alberta and Northern BC. It has a balanced portfolio of gas, natural gas, LNG, and crude oil.
The stock pays a very respectable dividend yield of 3.96% to its shareholders every quarter.
6. TC Energy (TSE:TRP)
Here are some key facts for TRP.TO:
- Market Cap: $53.63 billion
- 52-week Trading Range: $50.70 – $74.44
- PE Ratio: 80.68
- Dividend Yield: 7.25%
- 5-year performance: -1.02%
TC Energy is a Calgary-based pipeline company that operates across North America. It was previously known as the Trans Canada Pipeline Company.
The company owns a staggering 92,600 km of natural gas pipelines which accounts for more than 25% of North America’s total natural gas supply.
It also deals in crude oil transport, liquid natural gas, and renewable energy production. TC Energy recently stated that it is confident it will complete its Coastal GasLink pipeline by the end of 2023 and is exploring a new gas line in Mexico.
TRP pays a generous annualized 7.25% dividend yield to shareholders every quarter. The company raised this dividend earlier this year to $0.93 per share.
7. Pembina Pipeline (TSE:PPL)
Here are some key facts for PPL:
- Market Cap: $23.35 billion
- 52-week Trading Range: $40.82 – $53.58
- PE Ratio: 8.27
- Dividend Yield: 6.15%
- 5-year performance: 8.80%
Pembina Pipeline is another Calgary-based energy transport company that was established in 1954.
The company owns several key pipelines that deliver fuels from Northern BC to as far away as Chicago, Illinois.
Overall, its gas facilities can produce upwards of 6 billion cubic feet of gas per day.
PPL pays an annualized dividend yield of 6.15% to its shareholders quarterly.
8. Suncor Energy (TSE:SU)
Here are some key facts for SU:
- Market Cap: $54.02 billion
- 52-week Trading Range: $36.38 – $53.62
- PE Ratio: 6.22
- Dividend Yield: 5.12%
- 5-year performance: -11.91%
Suncor is a Canadian energy giant that produces crude oil, natural gas, and bitumen products. It was founded in 1919 in Montreal, Quebec.
The company owns numerous international production facilities in regions like Syria, the United Kingdom, and Libya.
It has also expanded into renewable energies like wind and solar, which positions it to continue to be an energy leader in Canada and abroad.
SU pays a healthy annualized dividend yield of 5.12% to its shareholders.
9. Fortis (TSE:FTS)
Here are some key facts for FTS.TO:
- Market Cap: $27.26 billion
- 52-week Trading Range: $48.45 – $65.26
- PE Ratio: 20.44
- Dividend Yield: 3.98%
- 5-year performance: 32.16%
Fortis is a Newfoundland-based Canadian utility company that offers electricity and natural gas services across Canada.
Its primary natural gas subsidiaries are FortisAlberta and FortisBC. It also owns Central Hudson Gas & Electric, which operates in New York.
The company also provides electricity and energy services to markets like Arizona, Belize, the Cayman Islands, Michigan, and the Maritimes in Canada.
Fortis pays a 3.98% dividend yield to its shareholders and has one of the longest track records for raising dividends on the TSX.
10. Imperial Oil (TSE: IMO)
Here are some key facts for IMO.TO:
- Market Cap: $37.85 billion
- 52-week Trading Range: $52.67 – $79.83
- PE Ratio: 5.66
- Dividend Yield: 2.72%
- 5-year performance: 81.97%
Imperial Oil is Canada’s second-best integrated oil company and was founded in 1880.
While you might not think of Imperial Oil as a natural gas company, it does produce and distribute natural gas throughout Canada and the world.
This company is majority owned by the American energy behemoth Exxon–Mobil. You might also know its consumer-facing gas stations that operate under the Esso brand in Canada.
Imperial Oil pays out a healthy 2.72% dividend yield to its shareholders each quarter.
How To Buy The Best Natural Gas Stocks in Canada
Buying natural gas stocks in Canada is an easy process on any brokerage platform. I prefer discount brokerages because they save on trading fees. Here are a couple of my favourites.
Questrade
The oldest and largest discount brokerage in Canada, Questrade offers investment tools like options trading, stocks, and ETFs.
While Questrade does not have zero-commission trading, it does offer Canadian stocks as low as $0.01 per share.
Questrade
Trade stocks, ETFs, options, FX, bonds, CFDs, mutual funds, etc.
Get $50 trade credit with $1,000 funding
Low and competitive trading fees
No quarterly inactivity fees
Access to advanced tools and trading data
Top platform for advanced traders
Transfer fees waived
Wealthsimple Trade
This financial site is owned by the Power Corporation of Canada and provides investment services, savings, and even crypto trading.
Wealthsimple Trade offers zero-commission trading on stocks (including natural gas stocks) and ETFs in Canada.
Wealthsimple Trade
Trade stocks, ETFs, and options
Excellent trading platform for beginners
Deposit $150+ to get a $25 cash bonus
Transfer fees waived up to $150
Are Natural Gas Stocks a Good Investment?
As my list of top 10 Canadian natural gas stocks indicates, most provide a stable return over a five-year period.
Natural gas companies in Canada see high margins and free cash flow, which allows them to pay a healthy dividend yield.
This dividend often accounts for lower long-term capital growth in the price of the stock.
It is important to remember that natural gas is a popular way of providing electricity and heating to consumers, but it is not a clean or renewable energy source.
This article is meant to introduce some of the best natural gas stocks in Canada. It is not meant to be taken as financial advice in any way.
Downsides of Investing in Natural Gas Stocks
As with most commodities, natural gas stocks are impacted by the price of natural gas in the economy.
Long-term capital growth is limited as most natural gas services industries are highly cost-regulated by governments.
With increasing clean and renewable energy sources, natural gas could eventually get phased out.
What are the Best Natural Gas ETFs?
It’s always difficult to pinpoint which stocks you want to buy. If you’re having trouble narrowing it down, why not invest in a basket of natural gas stocks through an ETF or Exchange Traded Fund? Here are some of my favourite natural gas ETFs for Canadian investors:
- Horizons Natural Gas ETF (TSE:HUN)
- United States Natural Gas Fund LP (NYSEARCA:UNG)
- ProShares Ultra Bloomberg Natural Gas (NYSEARCA:BOIL)
Conclusion
Natural gas stocks in Canada provide steady performance in your portfolio and can pay a solid dividend yield.
It is a commonly used source of electricity and heating for consumers and commercial clients. This means it has a long-term use case until it is replaced by a renewable energy source.
Natural gas industries are highly regulated, so these companies see high, recurring cash flows.
You can easily buy any of my recommended natural gas stocks or ETFs on a discount brokerage like Wealthsimple Trade or Questrade.
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FAQs
Tourmaline Oil (TOU.TO) is the largest producer of natural gas by volume in Canada. If you are looking for the largest company, Enbridge has the largest market capitalization.
There are several large pipeline operators in Canada, but the top pipeline stock is TC Pipelines LP.
Natural gas is a staple of the utilities industry in Canada and abroad. It is one of the leading sources of electricity and heating in the world, and it will be decades until it is replaced.
There are plenty of natural gas stocks in Canada to invest in on any Canadian brokerage. You can also choose a natural gas ETF, although the majority of these are US-domiciled.
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