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10 Top Natural Gas Stocks To Buy in Canada in February 2023

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 February 2023.

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 2022, Canada sits sixth in global natural gas production. It is behind only the United States, Russia, Iran, China, and Qatar. It has about a 4.3% share of the global natural gas market and produced 172.3 bcm (billion cubic metres) in 2021.

Here are the 10 Top Canadian Natural Gas Stocks I will be discussing in this article:

  • Enbridge (TSE:ENB)
  • Tourmaline Oil (TSE:TOU)
  • Canadian Natural Resources Ltd (TSE:CNQ)
  • Cenovus Energy (TSE:CVE)
  • Ovintiv Inc (TSE:OVV)
  • TC Pipelines LP (TSE:TRP)
  • Pembina Pipeline Corp (TSE:PPL)
  • Suncor Energy (TSE:SU)
  • Fortis (TSE:FTS)
  • AltaGas (TSE:ALA)

All facts and figures are as of August 2022.

Best Natural Gas Stocks To Buy in Canada

1. Enbridge (TSE:ENB)

Here are some key facts for ENB:

  • Market Cap: $112 billion
  • 52-week Trading Range: $46.88 – $59.69
  • PE Ratio: 23.01
  • Dividend Yield: 6.19%
  • 5-year performance: 11.11%

Enbridge is an oil and gas pipeline company that was established in 1949 and is 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 is increasing it by a further 3.0% in 2022.

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2. Tourmaline Oil (TSE:TOU)

Here are some key facts for TOU:

  • Market Cap: $24.5 billion
  • 52-week Trading Range: $29.25 – $72.64
  • PE Ratio: 10.06
  • Dividend Yield: 1.24%
  • 5-year performance: 187.23%

Tourmaline Oil explores, develops, and extracts crude oil and natural gas and is based out of Calgary, Alberta.

As of 2022, Tourmaline is the Canadian leader in natural gas production and the fifth largest in North America.

The company has secured a multi-year drilling inventory along with several key land acquisitions. This is particularly impressive given that the company was only established in 2008.

This stock pays a 1.24% dividend yield, and the company has also executed several share buybacks to increase shareholder equity.

3. Canadian Natural Resources Ltd (TSE:CNQ)

Here are some key facts for CNQ:

  • Market Cap: $76.4 billion
  • 52-week Trading Range: $37.82 – $88.18
  • PE Ratio: 8.25
  • Dividend Yield: 4.59%
  • 5-year performance: 65.47%

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:

  • Market Cap: $40.9 billion
  • 52-week Trading Range: $9.23 – $31.19
  • PE Ratio: 10.12
  • Dividend Yield: 2.03%
  • 5-year performance: 103.94%

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 2.03% 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. Ovintiv Inc (TSE:OVV)

Here are some key facts for OVV:

  • Market Cap: $15.8 billion
  • 52-week Trading Range: $28.10 – $79.28
  • PE Ratio: 15.01
  • Dividend Yield: 2.10%
  • 5-year performance: 0.24%

Ovintiv is a hydrocarbon production company that produces petroleum, natural gas liquids, and natural gas.

It is currently headquartered in Denver, Colorado, but it started in Calgary. You might recognize it by its previous name, which was Encana.

The company produces natural gas directly from shale deposits and holds a massive portfolio of projects at some of the largest basins in the US, including the Permian and the Uinta Basins.

OVV pays out a 2.10% dividend yield to shareholders and regularly increases dividends based on high margins and free cash flow.

Text that reads “Top natural gas stocks to buy in Canada” below an image of a natural gas plant

6. TC Energy (TSE:TRP)

Here are some key facts for TRP:

  • Market Cap: $61.57 billion
  • 52-week Trading Range: $57.71 – $74.44
  • PE Ratio: 19.63
  • Dividend Yield: 5.73%
  • 5-year performance: 0.38%

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.

TRP pays a generous annualized 5.73% dividend yield to shareholders every quarter.

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7. Pembina Pipeline (TSE:PPL)

Here are some key facts for PPL:

  • Market Cap: $25 billion
  • 52-week Trading Range: $37.02 – $53.58
  • PE Ratio: 19.89
  • Dividend Yield: 5.53%
  • 5-year performance: 12.34%

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 5.53% to its shareholders quarterly. 

8. Suncor Energy (TSE:SU)

Here are some key facts for SU:

  • Market Cap: $56 billion
  • 52-week Trading Range: $21.90 – $53.62
  • PE Ratio: 9.11
  • Dividend Yield: 4.81%
  • 5-year performance: -4.84%

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 4.81% to its shareholders.

9. Fortis (TSE:FTS)

Here are some key facts for FTS:

  • Market Cap: $28.4 billion
  • 52-week Trading Range: $54.73 – $65.26
  • PE Ratio: 22.46
  • Dividend Yield: 3.60%
  • 5-year performance: 29.38%

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 3.60% dividend yield to its shareholders.

10. AltaGas (TSE:ALA)

Here are some key facts for ALA:

  • Market Cap: $7.87 billion
  • 52-week Trading Range: $24.16 – $31.16
  • PE Ratio: 30.66
  • Dividend Yield: 3.77%
  • 5-year performance: 0.90%

AltaGas is a Calgary-based midstream natural gas company that was established in 1994.

The company has a production capacity of 2.3 billion Cubic Feet/day of natural gas. It has a strong customer base in the Eastern United States for utilities and sells and transports to markets in Asia and abroad.

ALA pays an annualized dividend yield of 3.77% on a quarterly basis.

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

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Low and competitive trading fees

Top platform for advanced traders

Get $50 trade credit with $1,000 funding

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.

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Deposit $200+ 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.

FAQs

What is the largest natural gas producer in Canada?

Tourmaline Oil 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.

What is the top Canadian pipeline stock?

There are several large pipeline operators in Canada, but the top pipeline stock is TC Pipelines LP.

What is the outlook for natural gas in the future?

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.

How can I invest in natural gas?

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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Author

Gravatar for Enoch Omololu, MSc (Econ)
Enoch Omololu, MSc (Econ)

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch is passionate about helping others win with their finances and has been writing about money matters for over a decade. He has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, CBC News, Financial Post, Toronto Star, CTV News, Canadian Securities Exchange, Credit Canada, National Post, and many other personal finance publications. You can learn more about him on the About Page.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

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