Suncor Energy: A Low-Cost Oil Producer Yielding 4.40%

There are thousands of oil stocks, ranging from household names like Chevron and Shell, to some real odd-balls that get zero coverage.

And while Suncor Energy ($SU) isn’t a complete unknown, it’s usually overshadowed by the industry's major players. And that’s too bad. Because Suncor is a low-cost oil producer located in Alberta, Canada.

This is a company that produces oil for $20 — $28 USD per barrel.

Low production costs allow Suncor to pay a hefty dividend. And the stock’s lesser-know status means that this business trades at a relatively cheap valuation.

In fact, Suncor is currently trading at a price to earnings ratio of 9.50. This is lower than Chevron, Exxon Mobil, and Valero Energy.

On top of this, Suncor offers a 4.40% starting dividend yield, which is higher than Exxon Mobil’s 3.28% or Shell’s 4.12%. And, Suncor has also achieved a 5-year compound annual dividend growth rate of 5.73%.

While the company did cut their dividend in 2020, Suncor quickly regrew their payouts. And by 2022, the company’s dividend was higher than it had been before the Pandemic.

Suncor’s long-term goal is to increase dividends by 4–5% per year. And the company also uses their free cash flow for share buybacks and…