Canadian Natural Resources' (TSE:CNQ) Dividend Will Be Increased To CA$0.85

Canadian Natural Resources Limited (TSE:CNQ) has announced that it will be increasing its dividend from last year's comparable payment on the 5th of January to CA$0.85. Based on this payment, the dividend yield for the company will be 4.1%, which is fairly typical for the industry.

Check out the opportunities and risks within the CA Oil and Gas industry.

Canadian Natural Resources' Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, Canadian Natural Resources' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 21.2% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 63%, which is comfortable for the company to continue in the future.

Canadian Natural Resources Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was CA$0.42, compared to the most recent full-year payment of CA$3.40. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Canadian Natural Resources has been growing its earnings per share at 37% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Canadian Natural Resources' Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 2 warning signs for Canadian Natural Resources you should be aware of, and 1 of them is concerning. Is Canadian Natural Resources not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.