3 Ultra-High-Yield Energy Dividend Stocks to Buy and Hold for 2026

Energy stocks aren’t always the first place investors look for reliable long-term income, but they actually can generate some of the strongest cash flows in the market. And when those cash flows are paired with disciplined management teams and shareholder-friendly dividend policies, they could become even more powerful wealth-building investments over time.

That’s especially true right now, as many energy companies continue to benefit from stronger operational efficiency, improved production, and surging oil prices. For income-focused investors, this creates an opportunity to lock in attractive yields while also gaining exposure to potential long-term capital appreciation. In this article, I’ll highlight three ultra-high-yield Canadian energy stocks that could be worth buying and holding through 2026 and beyond.

Freehold Royalties stock

Freehold Royalties (TSX:FRU) stands out as one of the most attractive royalty businesses in the Canadian energy sector. The company manages a large portfolio of oil and natural gas royalties across Canada and the United States, providing diversified exposure without directly bearing the operational risks associated with drilling activities.

FRU stock currently trades at $17.90 per share with a market cap of about $2.9 billion. Over the last year, the stock has surged more than 60%, reflecting strong operational momentum. It also offers a monthly dividend yield of 6% at this market price.

In 2025, Freehold posted revenue of $313 million and funds from operations (FFO) of $235 million, up 2% year over year (YoY). For the year, the company’s production jumped 9% YoY to a record of 16,294 barrels of oil equivalent per day (boe/d).

The company has also benefited from stronger U.S. natural gas pricing, which significantly improved cash flow generation. In 2026, Freehold expects its production to remain between an average of 15,500 and 16,300 boe/d, backed by its current inventory of drilling licences, permits, and drilled and uncompleted wells.

Moreover, the energy firm continues investing in land acquisitions, which could support its future production growth and dividend stability.

Parex Resources stock

Parex Resources (TSX:PXT) has also emerged as a strong energy stock for long-term income investors. The Calgary-based firm mainly focuses on conventional oil and gas production in Colombia and has delivered exceptional stock performance over the last year. PXT stock recently closed at $28.30 per share with a market cap of about $2.7 billion. Over the last 12 months, its shares have skyrocketed more than 160%. Also, the company currently offers a quarterly dividend yield of 5.5%.

Much of this strong momentum in Parex stock has been driven by its strategic acquisitions and operational improvements. Its planned acquisition of Frontera’s Colombian upstream business is expected to strengthen its infrastructure portfolio. The transaction includes oil and gas assets, a reverse osmosis water treatment facility, and a palm oil plantation.

Based on its preliminary first-quarter results, the company’s average production rose to 44,735 boe/d. As Parex continues exploring additional growth opportunities, its long-term growth outlook looks solid.

Peyto Exploration & Development stock

Peyto Exploration & Development (TSX:PEY) is another high-yield energy stock income investors may want to consider in 2026. The Calgary-headquartered natural gas producer operates primarily in Alberta’s deep basin and has built a reputation for operational discipline and efficient capital allocation.

After rallying by 47% over the last year, PEY stock currently hovers around $25 per share with a market cap of about $5.2 billion. In addition, Peyto offers a dividend yield of 5.1%, with monthly payouts.

Last year, Peyto reported funds from operations of $860.5 million. More importantly, the company’s disciplined hedging strategy helped protect revenues during periods of weaker natural gas prices, allowing it to maintain strong profitability.

The company also achieved record production of 145,000 boe/d in December 2025. Overall, Peyto’s extensive infrastructure network and continued investments in drilling, processing facilities, and pipeline projects position it well for future upside.

The post 3 Ultra-High-Yield Energy Dividend Stocks to Buy and Hold for 2026 appeared first on The Motley Fool Canada.

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More reading

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• How to Create Your Own Pension With Canadian Dividend Stocks

Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool recommends Freehold Royalties and Parex Resources. The Motley Fool has a disclosure policy.