Five energy dividend-payers

But beware volatility!

Energy is a fickle beast. When things are going well, they go very, very well. When they go bad, it’s horrid.

Horrid, as in oil prices going to zero. That happened in April 2020, at the onset of the Covid-19 pandemic. The impact on the economy was devastating. Demand for oil fell through the floor, and there were inadequate storage facilities to hold new production. As a result, the price of a barrel of some Western Canadian crude fell to below $0 a barrel. They were giving it away!

Think about that the next time you pull in to a gas station. You’ll be lucky if the price doesn’t change before the tank is full

Of course, we’re in a different phase of the cycle. The U.S.-Iran war has changed the structure of the industry, with the closure of the Strait of Hormuz. Oil prices are near all-time highs, and some countries have imposed rationing. If the conflict doesn’t end soon, some analysts have predicted prices could hit US$200 a barrel!

If you’re a consumer, things couldn’t be worse. If you’re a producer outside the Middle East, they couldn’t be much better. You can sell your product at world prices, without fear of blockades or air strikes.

Investors can look at this in two ways. The prices of most energy stocks have gone up, which looks good on the bottom line of your brokerage statement. But companies haven’t matched windfall profits with comparable dividend increases, meaning yields have dropped.

There are still good sources of cash flow in the energy sector. But choose carefully, and remember that some companies may be quick to cut their payouts if things flip again. Your goal should be consistency, so do your research before committing any funds.

Income investors should focus on companies with a long history of steady or rising dividends. Those with a track record of frequent ups and downs should be approached with caution.

Here are three high-yield Canadian energy performers that I track in my Income Investor newsletter. Prices are as of May 15.

Three for the money

Gibson Energy Inc. (TSX: GEI) is a Calgary-based liquids infrastructure company. Its principal businesses consist of the storage, optimization, processing, and gathering of liquids and refined products. The company’s main operations are located at Hardisty and Edmonton, Alberta, and in Ingleside and Wink, Texas. Gibson also has a facility in Moose Jaw, Saskatchewan, and infrastructure in the U.S.

The shares have a solid dividend history. There have been five increases since 2021, and we’re now at $0.45 per quarter, for a yield of 6.2%. In fact, Gibson has never cut its dividend. There was a long period when it was stuck at $0.33 a quarter (March 2016 to March 2020), but at no time was it reduced. That’s a strong encouragement for people who depend on steady cash flow to survive.

Keyera Corp. (TSX: KEY) is primarily in the natural gas and natural gas liquids business, providing such services as gathering, processing, fractionation, storage, transportation, and marketing. It does not do any exploration or production.

This is another reliable dividend payer. It has not reduced its dividend since 2003 and normally increases it annually.

Pembina Pipeline Corp. (TSX: PPL). This Calgary-based company owns pipelines that transport hydrocarbon liquids and natural gas products produced primarily in Western Canada. It also owns gas gathering and processing facilities and an oil and natural gas liquids infrastructure and logistics business.

During the darkest days of the pandemic, Pembina’s board insisted the dividend would be protected at all costs. The market thought otherwise, cutting the share price to about $15 in early 2020 from the $50 range. The company held firm, and the shares have been on an upward track ever since.

Rapid reaction duo

Now let’s look at two energy companies that react quickly to market changes.

Freehold Royalties Ltd. (TSX: FRU) is a Calgary-based energy company focused on acquiring and managing oil and natural gas royalties in Canada and the U.S. It has a portfolio of about 6 million gross acres in Canada and 1.2 million in the U.S., producing from over 21,000 wells. Freehold owns the mineral rights but does not operate the wells, incurring no capital costs for drilling or equipment, allowing it to pay monthly dividends.

Currently, those dividends are $0.09 a month ($1.08 a year) for an attractive yield of 6.1%. But the company has a history of slashing its payout in tough times. Most recently, it sliced the dividend by over 70% in the early stages of the pandemic. It took about 18 months for it to recover to above pre-pandemic levels.

Peyto Exploration & Development Corp. (TSX: PEY). Alberta-based Peyto is one of the top 10 gas producers and processors in Canada. The company focuses on exploring and producing unconventional natural gas in Alberta's Deep Basin. As one of Canada’s lowest-cost natural gas producers, Peyto is known for its efficient, high-margin operations.

The current monthly dividend is $0.11 a share, providing a yield of 4.9%. But history suggests that if petroleum prices drop after the Iran war, Peyto’s dividend may follow. In June 2020, the company reduced the payout from two cents per month to one cent per quarter. That was bumped up to five cents a month in November 2021 and to the current $0.11 a month in January 2023. There were previous dividend cuts in December 2010 and February 2009.

Bottom line

If your primary interest is steady cash flow, take a close look at the dividend history of any company (energy or otherwise) in which you’re interested. And check with you’re advisor to ensure the stock aligns with your financial objectives and risk profile (energy stocks, like most resource-based stocks, tend to be volatile).

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

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Notes and Disclaimer

Content © 2026 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

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