Here’s a 4.3% Yield From Cenovus Energy, an Oil & Gas Leader With Rising Production Volumes

Cenovus’s strong operational momentum and commitment to shareholder returns are backed by both upstream and downstream production rises. Cenovus’s is advancing major growth projects like Narrows Lake and West White Rose, both set to boost production even further in the coming years.

Valuation is another key attraction. Despite the company’s operational progress and improving capital returns, the stock remains inexpensive compared to peers and its own historical average. The shares currently trade at just 4.3 times the 2025 cash flow per share forecast, making it one of the most attractively valued names in the North American energy sector.

We always love to recommend great companies at great prices and this firm is a top pick for our subscribers.

CENOVUS ENERGY (Toronto symbol CVE; www.cenovus.com) is now Canada’s third-largest producer of oil and natural gas after Canadian Natural Resources and Suncor. That follows its all-stock acquisition of rival oil producer Husky Energy Inc. (Toronto symbol HSE) on January 1, 2021. It also operates refineries in Canada and the U.S.

Cenovus’s oil sands operations in Alberta accounted for 77% of its crude production in the latest quarter, followed by conventional oil (15%) and offshore projects (8%).

The company sends most of its crude oil production to its 50%-owned oil refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) holds the other 50%. As part of the Husky acquisition, Cenovus now owns 100% of refineries in Ohio (Toledo and Lima), as well as a third facility in Superior, Wisconsin. In all, those refineries supply roughly half of its revenue, which helps cut your risk.

Cenovus’s production in the three months ended March 31, 2025, rose 2.2%, to 818,900 barrels a day (82% oil, 18% gas) from 800,900 barrels a year earlier. That helped lift revenue by 1.8%, to $13.30 billion from $13.06 billion.

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Overall cash flow declined 1.3%, to $2.21 billion from $2.24 billion due to higher input costs at its refineries. Cash flow per share gained 1.7%, to $1.21 from $1.19 on fewer shares outstanding.

Cenovus’ Dividend Increase Reflects a Sound Balance Sheet and Future Prospects

Cenovus expects to spend between $4.6 billion and $5.0 billion on exploration and upgrades in 2025. Those investments should lift its production to between 805,000 and 845,000 barrels a day.

Thanks to that rising production, with the June 2025 payment, the company raised your quarterly dividend by 11.1%. The new annual rate of $0.80 a share yields 4.3%.

Cenovus ended the first quarter with net debt (total debt less cash balances) of $5.08 billion. Under its current shareholder return policy, once net debt reaches $4.0 billion, the company will return 100% of its free cash flow (after capital expenditures) to shareholders in the form of dividends and share buybacks. In the latest quarter, shareholder returns totalled 40% of its free cash flow.

For 2025, Cenovus’s cash flow per share should total $4.40 a share, and the stock trades at an attractive 4.3 times that forecast.

Recommendation in The Successful Investor: Cenovus Energy Inc. is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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