The fundamental question for any long-term investor in the Canadian energy sector is the future path of global oil demand. On this point, two leading authorities offer differing views. The International Energy Agency (IEA) projects oil demand will peak this decade, while OPEC sees growth for decades to come. Thereâs significant divergence and uncertainty. However, the solution for investors is simply to find Canadian energy stocks built to withstand volatility and continue rewarding shareholders through any market environment. Whitecap Resources (TSX:WCP) stock is one of the most promising Canadian energy stocks to buy in October, and its exceptional commitment to returning cash to shareholders is outstanding.
Whitecap Resources stock: Your monthly dividend machine
If youâre looking for regular passive income, Whitecap Resources stock is a rare gem. Most TSX stocks that historically paid monthly dividends have changed payment frequencies to quarterly, from 12 dividend cheques to just four per year. However, Whitecap Resources stands apart by paying shareholders a juicy dividend every single month. This monthly paycheque compounds faster, accelerating your wealth building. With a compelling 7% dividend yield, these regular monthly dividends form the bedrock of its total return proposition.
The math behind this income stream is equally impressive. Using the Rule of 72 â a simple calculation that estimates how long it takes to double your money through compounding â investors could see their capital double in approximately 10.3 years from dividends alone. That’s before considering any potential share price appreciation.
What makes this dividend particularly secure is the company’s conservative historical payout ratio below 50%, meaning Whitecap has been earning more than enough to cover its distributions while reinvesting in the business.
A fortress balance sheet in a cyclical industry
Whitecap Resources is a lesson in financial discipline. The company maintains an investment-grade credit rating that speaks to its financial health. More impressive is its net debt-to-EBITDA ratio (a measure of leverage that compares what a company owes to its annual earnings before interest, taxes, depreciation, and amortization), which management projects at just 1 times for 2025. This remarkably manageable debt level provides crucial flexibility when oil and natural gas prices fluctuate, ensuring the company can continue rewarding shareholders even during market downturns.
This financial strength supports Whitecap Resources’s explicit target of delivering 10% to 15% in annual total shareholder returns. The strategy is straightforward: grow organically, buy back shares when they’re undervalued, and maintain that coveted monthly dividend. Management has already demonstrated this commitment, aggressively raising the dividend between 2021 and 2024 while completing nearly $1 billion in share repurchases since 2017.
While past performance isn’t indicative of future returns, Whitecap Resources stock averaged 40.7% in compound annual total returns during the past five years.
WCP stock: A Canadian energy stock positioned for whatever comes next
Whitecap’s operational excellence makes its good financial performance possible. As Canada’s seventh-largest oil producer and fifth-largest natural gas producer, the company boasts a diversified portfolio across Alberta and Saskatchewan. Its production is weighted toward higher-value light oil and natural gas liquids, and it’s strategically positioned to benefit from Canada’s expanding LNG export capacity to premium international markets.
The company further de-risks its operations through sophisticated hedging strategies, with 25% of its 2026 oil production and 33% of natural gas already protected against price drops. This prudent management ensures stability in the company’s cash flow, directly supporting that reliable monthly dividend.
Perhaps most compelling for long-term investors is Whitecap’s extensive resource base, which would take 17.5 years to deplete at current production rates. The company has consistently grown its reserves at a 13% compound annual rate since 2009 while increasing per-share production by 11% annually since 2010. This demonstrates an exceptional ability to replace and expand what it produces, ensuring longevity that few competitors can match.
Long-term-oriented investors searching for Canadian energy stocks to buy in October may check out Whitecap Resources stock right now. It represents a complete package: substantial monthly income, fortress-like financials, and disciplined growth. While the energy sector is known for its booms and busts, this is one oil and gas stock you could comfortably hold forever, collecting juicy monthly dividends while watching your investment compound for decades.
The post 1 Canadian Energy Stock You’ll Want to Hold Forever appeared first on The Motley Fool Canada.
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Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Whitecap Resources. The Motley Fool has a disclosure policy.
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