On April 7, energy stocks were surging as analysts predicted that oil prices could hit US$150 or even US$200 a barrel (U.S. currency) if the Iran war dragged on. At that point, the S&P/TSX Capped Energy Index was showing a year-to-date gain of 41.34 per cent.
The next day, Donald Trump retreated from his reckless warning that his military would wipe out a whole civilization in one night if his demands weren’t met. They weren’t, but we got a shaky two-week ceasefire instead.
On April 8, energy stocks plunged. Suncor Energy Inc. (SU-T) fell 3.83 per cent, Cenovus Energy Inc. (CVE-T) was off 4.87 per cent, and Canadian Natural Resources Ltd. (CNQ-T) lost 6.02 per cent. The sell-off continued on April 9, although it was not as pronounced. On Friday April 10, energy stocks prices rose again. Then came the failure of the peace talks and another jump in the oil price.
We’re going to have to learn to cope with these gyrations. No one can predict with certainty what will happen in the coming weeks. But there seems to be a consensus that oil prices will remain at higher levels than before the start of the Iran conflict on Feb. 28. If so, that suggests buying opportunities when prices dip.
For income investors, the goal in this situation is to improve your energy cash flow. That means looking at some of the lesser-known names in Canada’s oil patch. The biggies pay decent but unexciting dividends. Shares of Cenovus yield 2.4 per cent, Suncor pays 2.8 per cent, and CNQ has a 4.2 per cent yield. If you’d like higher cash flow from your energy holdings, consider some of the smaller producers. You’ll find much better yields – but you will also have to accept higher risk.
One company that’s worth your attention is Cardinal Energy Ltd. (CJ-T), which is based in Calgary. Here are the details. Prices are as of end of day on April 21 unless otherwise indicated.
Cardinal Energy (CJ-T)
- Type: Common stock
- Current price: $11.15
- Entry level: Current price
- Annual payout: $0.72
- Yield: 6.4 per cent
- Risk Rating: Higher risk
The business: Cardinal is an oil and natural gas company that focuses on low decline oil in Western Canada. Low-decline oil refers to oil fields that experience a very slow drop in production over time, often maintaining steady output for decades. Unlike the reserves of conventional wells which drop steeply, these reservoirs provide long-term, stable output and significant, reliable free cash flow.
The security: We are recommending the common shares of Cardinal Energy to readers of our Income Investor newsletter. They trade on the TSX under the symbol CJ. The market cap is $1.9-billion.
Why we like it: Dependable cash flow. The shares have paid a dividend of 6 cents a month (72 cents a year) since October 2022. The company has not cut the dividend since January 2016. Other attractions are low debt and long reserve life.
Financial highlights: In fiscal 2025 (12 months to Dec. 31) Cardinal reported a drop of 12 per cent in petroleum and gas revenue, to $533.7-million. Earnings were down 81 per cent to $20.8-million (13 cents per share).
The main reason for the decline – and this will seem strange today – was low prices. The company said the WTI benchmark oil price averaged US$59.14/bbl during the fourth quarter compared to US$64.93/bbl in the third quarter of 2025 and US$70.27/bbl in the same quarter of 2024.
Risks: The drop in profits pushed the payout ratio in the fourth quarter to 117 per cent, compared to 69 per cent the year before. For the year, the payout ratio was 94 per cent compared to 81 per cent in 2025. Normally, this would be a red flag but the jump in oil prices due to the Iran war, should more than offset last year’s decline.
Distribution policy: As mentioned, the stock pays a monthly dividend of 6 cents per share.
Tax implications: Payments are eligible for the dividend tax credit if the shares are held in an unregistered plan.
Who it’s for: Cardinal Energy is suitable for investors who want better cash flow from their energy holdings and are willing to accept the ups and downs of the oil market.
How to buy: The stock trades on the TSX. The shares are actively traded, averaging 1.4 million a day, so you should have no trouble getting a fill.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.
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