Suncor Energy Inc (NYSE:SU) Emerges as a Top Dividend Stock with Strong Yield and Financial Stability

Suncor Energy Inc (NYSE:SU) stands out as a strong option for investors focused on dividends after meeting strict criteria aimed at finding high-quality income-producing stocks. The screening process focuses on firms with solid dividend traits while ensuring sufficient profitability and financial stability, important for maintaining consistent payouts over time. Stocks are assessed using ChartMill's Dividend Rating (minimum 7/10), along with profitability and health scores (both at least 5/10), balancing yield reliability and operational strength.

Dividend Strength: Yield and Sustainability

Suncor’s appeal to dividend investors is supported by key metrics:

• High Yield: The company currently provides a 4.23% dividend yield, significantly higher than the S&P 500 average of 2.40%. This makes it a valuable addition to income-focused portfolios.
• Consistent History: With dividends paid for over 10 years and no cuts in the last three years, Suncor shows dedication to shareholder returns. Its 5.68% annual dividend growth rate is steady, reflecting careful management rather than risky increases.
• Balanced Payout Ratio: Suncor allocates 46.04% of its income to dividends, balancing shareholder rewards with retained earnings for growth. The fundamental report highlights that earnings growth exceeds dividend growth, reinforcing payout stability.

Profitability and Financial Health: Key to Stability

Dividend reliability depends on a company’s ability to produce steady profits and maintain a solid financial position. Suncor scores 6/10 for profitability and 7/10 for financial health in ChartMill’s evaluation, showing no major concerns:

• Profitability Metrics: The company’s 12.04% profit margin and 17.86% operating margin are strong within the energy sector, surpassing 60–70% of competitors. Its return figures (ROA of 6.80%, ROE of 13.59%) also exceed industry averages.
• Financial Strength: Suncor’s low debt-to-equity ratio (0.29) and solid solvency metrics (Altman-Z score of 2.17, debt-to-FCF ratio of 1.64) indicate resilience against commodity price swings. Liquidity is sufficient, with a current ratio of 1.39, though the quick ratio (0.84) should be watched.

Valuation and Growth Outlook

Trading at a P/E of 11.31—below the industry (19.74) and S&P 500 (26.54) averages—Suncor looks fairly priced. However, growth expectations are modest:

• Revenue is forecast to decline slightly (-0.96% annually) in the near term, though EPS growth is estimated at 11.58%, supported by efficiency improvements and cost control.
• The stock’s 7/10 Dividend Rating highlights its yield and track record, but investors should consider the trade-off between income and slower revenue growth.

Conclusion and Next Steps

Suncor Energy fits the mold of a dividend stock with a mix of yield, reliability, and financial strength. Its diversified operations (oil sands, refining, and retail) offer sector variety, while disciplined capital use supports ongoing payouts. For those seeking stable income with modest growth, SU deserves further examination.

Find More Dividend Options: The Best Dividend Stocks screener lists other high-rated stocks filtered using the same strict criteria.

Disclaimer: This analysis is not investment advice. Investors should perform their own research, considering risk tolerance and portfolio goals before making decisions.