Suncor Versus Canadian Natural Resources: The Energy Stock I’d Buy on Climbing Oil

When oil prices rise, Canadian energy stocks tend to attract more attention, and for good reason. These energy stocks often have strong cash flow, high dividends, and the kind of global exposure that benefits from rising crude. Right now, two of the biggest names in the sector are Suncor Energy (TSX:SU) and Canadian Natural Resources (TSX:CNQ). Both are major players, both have long-term staying power, and both reward shareholders well. But if I had to choose just one stock to bet on as oil climbs, here’s what I’d pick.

Suncor

First, let’s compare. Suncor is well known among Canadian investors. It’s an integrated energy stock, which means it does everything from extracting oil to refining and selling finished fuels. That diversification helps smooth out the ups and downs of oil prices. When crude falls, refining margins can help cushion the blow. But that same structure can also limit how much upside you get when oil prices surge.

In its most recent quarter, Suncor posted net earnings of $1.7 billion, or $1.31 per share, beating estimates. That’s up from $818 million the previous quarter. Still, revenue was a bit lighter than expected at $12.5 billion. The energy stock has been working on improving operational performance after years of criticism, and it seems to be delivering. It also pays a solid dividend of $0.57 per share quarterly, which works out to a yield around 4.4%. With a market cap of about $64 billion, Suncor is still one of the most stable energy stocks in the country.

CNQ

Canadian Natural Resources, on the other hand, is more of a pure play on oil and gas production. It doesn’t refine or sell end products; it focuses entirely on extracting value from the ground. That makes it more sensitive to swings in oil prices, but it also means better returns when crude is moving higher. And lately, that’s been the case.

CNQ’s most recent quarterly results were impressive. It posted net earnings of $2.5 billion, or $1.16 per share, easily beating analyst expectations. Revenue came in at $10.9 billion, also ahead of forecasts. Those numbers doubled from the previous quarter, showing the kind of leverage CNQ has when prices rise. Its market cap is around $91 billion, making it one of Canada’s largest companies by value. CNQ stock also offers a dividend of $0.59 per share quarterly, giving it a yield above 5.4%. That’s higher than Suncor’s, even though CNQ is delivering faster earnings growth.

Considerations

Another key factor is valuation. CNQ trades at a forward price-to-earnings ratio of about 12.3. That’s fairly low for an energy stock with this kind of profit growth and payout. Suncor’s valuation is a bit higher, and while it’s not expensive, it doesn’t offer the same growth profile. CNQ also has a long track record of increasing its dividend. In fact, over the past decade, it’s one of the most consistent dividend raisers in the sector.

When deciding between these two, it comes down to what kind of exposure you want. Suncor gives you stability and lower volatility. It’s a great pick for conservative investors or those looking for long-term income. But if you’re trying to capture gains during a period of rising oil prices, Canadian Natural offers more torque. You’ll feel the upside more clearly, and you’re still getting paid handsomely while you wait.

Of course, the risk is higher with CNQ. If oil drops sharply, its earnings will take a bigger hit. But the energy stock has proven its ability to manage costs and debt, and it continues to reinvest in assets that produce at a low breakeven price. It’s not reckless growth; it’s disciplined expansion.

Bottom line

If I had to bet on one stock to benefit from higher oil, I’d choose CNQ. You’re getting higher dividend income, stronger earnings growth, and more exposure to crude prices. Over the next few years, as the world continues to lean on oil during the transition to renewables, companies like Canadian Natural will remain central to global supply. It’s not just a short-term trade. It’s a long-term winner for those who don’t mind a little extra volatility in exchange for a whole lot of upside.