Suncor’s phenomenal corporate transformation into a high-efficiency cash compounding machine under a fundamentally disciplined management team is the most compelling argument for acquiring this premium long-term pick. For years, the market penalized the company for operational inconsistencies and safety bottlenecks. Under current executive leadership, the company has completely reversed this narrative by stripping out structural overheads while achieving all-time highs in upstream extraction and downstream product sales.
The stock trades at just 5.0 times the company’s forward cash flow per share. It also yields a solid 3.1%.
SUNCOR ENERGY INC. (Toronto symbol SU) is Canada’s largest integrated oil firm, with major projects in the Alberta oil sands. It also operates four refineries (three in Canada and one in Colorado), along with over 1,800 Petro-Canada gas stations.
Most of Suncor’s oil comes from mining the tar-like bitumen that lies close to the surface. However, over time, it becomes more difficult to reach bitumen at deeper levels.
As a result, the company plans to increase its use of steam and solvents (a process called “in situ”) to loosen the bitumen and help it flow to the surface.
Right now, traditional mining supplies about 70% of its oil sands production, with in situ accounting for the remaining 30%. By 2040, Suncor expects 60% of its output will come from in situ.
As the in-situ process costs less than mining, the change will also cut Suncor’s operating costs by $5 U.S. a barrel by 2028. The shift should also increase its production, from 855,000 barrels a day in 2025 to 955,000 barrels in 2028.
Suncor also estimates it now has 30 billion barrels (8 billion mining, 22 in situ) of bitumen reserves, which is 11 billion barrels more than its previous forecast. Those reserves could last 95 years.
The rising production combined with falling operating costs should add $2 billion to Suncor’s annual free cash flow (regular cash flow less capital expenditures) by 2028.
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Suncor’s higher oil prices are only part of the company’s bright future
The company produced 872,200 barrels a day in the first quarter of 2026, up 2.6% from 853,200 barrels a year earlier. That increase reflects a 1.0% rise in output from its oil sands projects (91% of total output). On top of that, sales of refined petroleum products rose 3.1% to 497,800 barrels a day from 482,700 barrels.
Suncor also continues to benefit from the jump in crude oil prices due to the Iran war. As a result, revenue in the quarter rose 15.7%, to $15.42 billion from $13.33 billion. That topped the consensus forecast of $13.91 billion.
The higher revenue also lifted overall cash flow by 32.3%, to $4.03 billion from $3.05 billion. The company spent $825 million on share buybacks in the quarter, which is why cash flow per share rose at a faster rate of 37.8%, to $3.39 from $2.46. That also beat the consensus estimate of $3.29.
Suncor last increased your quarterly dividend with the December 2025 payment. Investors now receive $0.60 a share, up 5.3% from $0.57. The new annual rate of $2.40 yields 3.1%. What’s more, the company plans to increase the dividend rate by 3% to 5% annually.
Suncor expects to spend $5.5 billion to $5.8 billion on new drilling and upgrades in 2026 and produce between 840,000 and 870,000 barrels a day.
The company also continues to cut its operating costs, which will help lift its full-year cash flow by 45% to $15.22 a share and the stock trades at an attractive 5.0 times that forecast.
Suncor has raised its dividend by an average 23.4% annually in the past five years. Its TSI Dividend Sustainability Rating is Above Average.
Recommendation in The Successful Investor: Suncor Energy Inc. is a buy.
