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Back on April 7, energy stocks were surging as analysts predicted that oil prices could hit $150 or even $200 a barrel (U.S. currency) if the Iran war dragged on. At that point, the S&P/TSX Capped Energy Index was showing a year-to-date gain of 41.34%.
The next day, Donald Trump retreated from his ill-advised warning that his military would wipe out a whole civilization in one night if his demands weren’t met. They didn’t, but we got a shaky ceasefire instead.
On April 8, energy stocks plunged. Suncor fell 3.83%, Cenovus Energy was off 4.87%, and Canadian Natural Resources lost 6.02%. The selloff continued on April 9, although it was not as pronounced.
On Friday April 10, energy stocks prices rose again. Then came the failure of the peace talks and another jump in the oil price, only to fall again to US$84/bbl in mid-April, surging to US$108 in mid-May, and closing out the month around US$87.
We’re going to have to learn to cope with these gyrations. No one can predict with certainty what will happen in the coming weeks.
But there seems to be a consensus that oil prices will remain at higher levels than before the start of the Iran conflict on Feb. 28. If so, that suggests buying opportunities when prices dip.
For income investors, the goal in this situation is to improve your energy cash flow. That means looking at some of the lesser-known names in Canada’s oil patch. The biggies pay decent but unexciting dividends. Currently, shares of Cenovus yield 2.1%, Suncor pays 2.7%, and CNQ has a 3.8% yield.
If you’d like higher cash flow from your energy holdings, consider some of the smaller producers. You’ll find much better yields – but you will also have to accept higher risk.
Here’s one that’s worth your attention.
Cardinal Energy Ltd. (TSX: CJ) is an Alberta-based oil and natural gas company that focuses on low-decline oil in Western Canada. Low-decline oil refers to oil fields that experience a very slow drop in production over time, often maintaining steady output for decades. Unlike the reserves of conventional wells, which drop steeply, these reservoirs provide long-term, stable output and significant, reliable free cash flow.
Cardinal has a market cap of $1.9 billion. It also has dependable cash flow. The shares have paid a dividend of $0.06 a month ($0.72 a year) since October 2022. The company has not cut the dividend since January 2016. Payments are eligible for the dividend tax credit if the shares are held in an unregistered plan. Other attractions are low debt and long reserve life.
In fiscal 2025 (12 months to Dec. 31) Cardinal reported a drop of 12% in petroleum and gas revenue, to $533.7 million. Earnings were down 81% to $20.8 million ($0.13 per share). The main reason for the decline – and this will seem strange today – was low prices. The company said the WTI benchmark oil price averaged US$59.14/bbl during the fourth quarter compared with US$64.93/bbl in the third quarter of 2025 and US$70.27/bbl in the same quarter of 2024.
The drop in profits pushed the payout ratio in the fourth quarter to 117%, compared with 69% the year before. For the year, the payout ratio was 94% compared with 81% in 2025. Normally, this would be a red flag, but the jump in oil prices due to the Iran war should more than offset last year’s decline.
Cardinal Energy is suitable for investors who want better cash flow from their energy holdings and are willing to accept the ups and downs of the oil market. The stock trades on the TSX. The shares are actively traded, averaging 1.4 million a day, so you should have no trouble getting a fill.
Consult your financial advisor before investing to ensure the stock is a suitable match for your portfolio and aligns with your financial objectives and tolerance for risk.
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.
Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.
For more information and details on how to subscribe to Gordon’s newsletters, go to www.buildingwealth.ca/subscribe.
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.
Image: iStock.com/Max Zolotukhin
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