You can see from the table that Suncor Energy Inc. (USA) (NYSE:SU) and Canadian Natural Resource Ltd (USA) (NYSE:CNQ) are currently yielding significantly above their historic averages, while Imperial Oil Limited (USA) (NYSEAMEX:IMO) is within 1.0% to 7.3% of its average. Based on this table, it looks like Suncor Energy and Canadian Natural Resources are undervalued. I looked at some Morningstar information and it confirms my findings. Morningstar has a four-star rating for Imperial Oil and a five-star rating for Canadian Natural Resources and Suncor Energy.
Suncor Energy Inc. (USA) (NYSE:SU) and Canadian Natural Resource Ltd (USA) (NYSE:CNQ) both have five-star ratings, but Suncor Energy has a better dividend yield. If Canadian Natural Resources’ price were to drop to $25.00, which would result in a dividend yield of 2.0% I’d consider investing in it. Imperial Oil Limited (USA) (NYSEAMEX:IMO) has a very low yield and the price would have to drop significantly to get to a yield ranging from 2.0% to 2.5% so I didn’t bother determining my target price.
There are some other compelling options in this industry right now, but only one of them meets my minimum dividend yield requirements, so for the time being Suncor Energy Inc. (USA) (NYSE:SU) is looking like the best option from a dividend growth perspective.
Michael Weber has a position in Suncor and Imperial Oil. The Motley Fool has no position in any of the stocks mentioned.
The article Canada’s Undervalued Dividend Growth Stocks originally appeared on Fool.com.
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