1 Canadian Dividend Stock Off 15% to Buy and Hold Forever

It’s easy to default to the usual Canadian dividend giants — but sometimes the more compelling opportunities are the ones hiding in plain sight. That’s exactly the case with Tourmaline Oil (TSX:TOU), a top-tier energy company that doesn’t always get the attention it deserves.

With the stock recently trading about 15% below prior highs, long-term investors have a rare chance to lock in a fairly reliable income stream and meaningful upside potential.

A dividend story that may be better than it looks

At first glance, Tourmaline Oil’s dividend history may seem inconsistent. But a closer look reveals a highly shareholder-friendly company. The company pays a steady base dividend, then supplements it with special dividends when excess cash allows.

This approach has led to significant total payouts over time. For example, in 2022, Tourmaline Oil distributed an exceptional amount of special dividends after generating record free cash flow of $3.2 billion — more than double the prior year — thanks to higher natural gas prices.

Even without the special dividends, the base dividend has grown impressively. Since initiating payouts in 2018, Tourmaline Oil has increased its regular dividend fivefold and maintained growth even during the 2020 market downturn. That kind of resilience is exactly what long-term income investors might look for.

Built for profitability in most markets

One of Tourmaline Oil’s biggest strengths is its position as a low-cost producer with a strong balance sheet. The company has little debt and resists the industry temptation to over-expand during boom cycles. Instead, management prioritizes disciplined capital allocation and returning cash to shareholders.

Another key advantage is its evolving pricing strategy. Historically, Canadian natural gas producers were heavily exposed to AECO pricing, which is typically discounted versus the international market. Tourmaline Oil has deliberately shifted away from that model.

By the end of 2025, roughly 71% of its production was tied to premium markets, including the U.S. Gulf Coast, California, and international liquefied natural gas (LNG) benchmarks. The impact is clear: in the fourth quarter of 2025, the company realized an average price of $3.77/mcf — far above the $2.26/mcf AECO benchmark.

This strategic shift not only boosts profitability but also reduces reliance on domestic pricing that’s typically weaker.

Long-term growth backed by massive reserves

Tourmaline Oil isn’t just a dividend play — it’s also a long-term growth story. As Canada’s largest natural gas producer, it has the scale and resource base to expand for decades.

Last month, the company reported having 6 billion barrels of oil equivalent in proved plus probable reserves. At 2025 production levels, that’s enough to sustain operations for approximately 26 years. Few companies offer that level of visibility.

Additionally, with about 80% of production weighted toward natural gas, Tourmaline Oil is well positioned to benefit from rising global demand — especially as LNG exports continue to grow. Its increasing exposure to international markets further strengthens that outlook.

At $59.85 per share at writing, the stock yields about 3.3% on its base dividend alone. When you factor in potential special dividends and an analyst-implied upside of roughly 18%, the total return opportunity becomes even more compelling.

Investor takeaway

Tourmaline Oil combines three powerful traits: a growing base dividend, opportunistic special payouts, and strong long-term growth potential. Its disciplined management, premium pricing exposure, and massive reserve base make it a top stock in Canada’s energy sector. For investors willing to buy on weakness and hold for the long haul, this underappreciated stock offers a rare blend of income, stability, and upside.

The post 1 Canadian Dividend Stock Off 15% to Buy and Hold Forever appeared first on The Motley Fool Canada.

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More reading

• 4 Canadian Dividend Stocks That Could Help You Build $500 in Monthly Income
• One Year On: This Monthly Dividend Stock Hasn’t Missed a Beat
• 1 Canadian Dividend Stock Down 28% That Looks Worth Buying and Holding
• This Canadian Dividend Stock Is Down 8.9% — and Worth Holding for Decades
• A Canadian Energy Stock Poised for Big Growth in 2026

Fool contributor Kay Ng has positions in Tourmaline Oil. The Motley Fool recommends Tourmaline Oil. The Motley Fool has a disclosure policy.