The Best Canadian Stock to Own if Volatility Returns

By Jitendra Parashar at The Motley Fool Canada

While the S&P/TSX Composite Index recently reached new heights, market volatility can quickly return if geopolitical tensions rise again. Recent developments in the Middle East are reminding investors how fragile market sentiment can be. Escalating conflict involving Iran, Israel, and the United States has already pushed oil prices sharply higher and increased uncertainty across global markets.

During uncertain periods like these, Foolish investors should ideally focus on companies with resilient operations, dependable cash flow, and strong shareholder returns. One Canadian stock that continues to check all those boxes off is Canadian Natural Resources (TSX:CNQ). With a diversified production base, strong free cash flow generation, and a long history of rewarding shareholders, it could be one of the best Canadian stocks to own if volatility returns. Let’s take a closer look.

CNQ stock continues to stand out

To put it simply, Canadian Natural Resources is one of the largest crude oil and natural gas producers in the country, with operations across Western Canada, the North Sea, and Offshore Africa. Its diversified portfolio includes oil sands mining, upgrading operations, conventional crude oil production, and natural gas assets.

CNQ stock has seen a 57% gain over the last 12 months and currently trades around $67 per share, giving the company a market capitalization of roughly $140 billion. More importantly for income investors, it also offers reliable quarterly dividends, with an annualized yield of 3.7% at the current market price.

The company’s recent financial growth trends clearly highlight why CNQ stock has seen solid gains over the last year. In the first quarter of 2026, Canadian Natural Resources generated adjusted net earnings of $2.4 billion. It also reported adjusted funds flow of $4.4 billion.

Its strong production volumes and disciplined cost management supported those results. Notably, the company’s oil sands mining and upgrading segment achieved industry-leading operating costs of $23.73 per barrel for synthetic crude oil production.

During the quarter, CNQ’s total production averaged nearly 1,643,000 barrels of oil equivalent per day, reflecting a 4% year-over-year (YoY) increase. Record North American exploration and production volumes, combined with strong thermal in situ asset performance, drove that growth.

A strong focus on shareholder returns

One reason many long-term investors continue holding CNQ stock through volatile markets is its commitment to returning cash to shareholders. The company returned around $1.5 billion directly to shareholders during the first quarter alone, including about $1.2 billion in dividends and $0.3 billion in share repurchases.

Its long-term dividend track record is especially impressive. Canadian Natural Resources has now increased its dividend for 26 consecutive years while maintaining a compound annual growth rate (CAGR) of 20%. That consistency reflects both the durability of its operations and the strength of its balance sheet.

The company’s financial flexibility also gives it room to continue investing for future growth while rewarding shareholders. Even during periods of commodity price volatility, CNQ has shown an ability to generate significant free cash flow through efficient operations and disciplined capital allocation.

Long-term growth opportunities remain strong

Beyond its current financial strength, Canadian Natural is continuing to invest in long-term growth initiatives that could support its future returns. The company’s conventional exploration and production assets continue offering capital-efficient drilling opportunities in the near term. Meanwhile, the company is progressing on medium-term projects like the Jackfish expansion and Pike 2 project, with front-end engineering work underway in 2026.

CNQ also has strong long-term growth opportunities within its oil sands mining and upgrading business. Projects such as the Jackpine Mine expansion, Horizon In-Pit Extraction Plant, and Paraffinic Froth Treatment expansion could improve production growth in the future once regulatory conditions become clearer.

Given these positive factors, Canadian Natural Resources continues to look really attractive for investors looking for a stock that could outperform the broader market even amid market volatility.

The post The Best Canadian Stock to Own if Volatility Returns appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has positions in Canadian Natural Resources. The Motley Fool recommends Canadian Natural Resources. The Motley Fool has a disclosure policy.

2026