Cenovus stock soars over 10% as Canadian oil and gas producer hikes dividend
New expansion phase at Cenovus’ Christina Lake oilsands operation in northern Alberta. (Photo: Business Wire) · Business Wire
Cenovus Energy (CVE.TO)(CVE) raised its dividend in the face of weaker oil prices, sending shares of the Canadian oil and gas company over 10 per cent higher on Thursday.
The Calgary-based producer hiked its annual payout to shareholders from $0.72 per share to $0.80 per share. This amounts to an 11 per cent increase beginning in the second quarter of 2025.
Cenovus says its base dividend is sustainable down to U.S. benchmark crude prices of US$45 per barrel of West Texas Intermediate. WTI has fallen over 20 per cent since early April. Accelerated OPEC+ production hikes and global trade tensions have prompted a number of economists to lower their price forecasts for the remainder of 2025.
The U.S. benchmark price (CL=F) climbed over two per cent on Thursday, as investors responded to a potential U.S.-UK trade deal, as well as expected talks between U.S. officials and their Chinese counterparts in Switzerland later this week.
Cenovus reported first-quarter financial results before Thursday’s opening bell, topping analyst estimates. Falling crude prices saw net income decline to $859 million, versus $1.18 billion in the same period last year.
While falling oil prices have weighed on shares of Canada’s large integrated oil and gas producers, Cenovus stock has been hardest hit year-to-date, with a more than 25 per cent decline. Toronto-listed shares closed 9.15 per cent higher on Thursday at $17.78.
Speaking on the company’s quarterly conference call with analysts, CEO Jon McKenzie said Cenovus is “well-positioned in any reasonable commodity price scenario.”
“As we deliver our growth projects and build momentum in our downstream business, we’re confident in our ability to continue to grow our dividend consistently over time,” he said on Thursday.
McKenzie adds that Cenovus’ capital spending is set to fall in the fourth quarter as projects near completion. The company’s 2025 guidance includes a $4.6 billion to $5 billion budget for capital investment.
“We’re pretty confident we’re going to see a drop,” chief financial officer Kam Sandhar told analysts on the call.
“I think somewhere in that low $4 billion range is a good starting point for you guys to think about for 2026.”
In its first quarter, Cenovus says it returned $595 million to shareholders via dividends, stock purchases, and redemptions of preferred shares.
“With the value we see in our shares today, and with capital investment decreasing as we complete our major projects, we see a significant opportunity to increase our returns to shareholders through buybacks going forward, and continuing to ensure our balance sheet remains strong,” Sandhar said.
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