Deal Alert: This Canadian Dividend Knight, Down 14%, Offers a Rock-Solid Yield
Written by Amy Legate-Wolfe at The Motley Fool Canada
Markets have been shaky lately, and that's made high-quality dividend stocks stand out even more. One that fits the bill is Whitecap Resources (TSX:WCP). It recently dropped about 14%, but it still pays a dependable monthly dividend that looks solid in any market.
Whitecap operates in light oil and natural gas production across Western Canada. It isn't a start-up; it has built a reputation for stability and income. In May 2025, it paid $0.0608 per share, as it has every month since early 2024. That represents about $0.73 annually, which works out to a yield around 8.3% based on its current share price.
A high yield is tempting, but it only works if the dividend stock can support it. Thankfully, Whitecap's payout ratio is healthy, about 48% of earnings, so the dividend is well covered by profit. That gives it room to pay investors monthly without stretching its finances thin. In fact, a $10,000 investment would bring in around $839.50 annually, or about $70 a month!
COMPANY
RECENT PRICE
NUMBER OF SHARES
DIVIDEND
TOTAL PAYOUT
FREQUENCY
TOTAL INVESTMENT
WCP.TO
$8.69
1,150
$0.73
$839.50
Monthly
$9,993.50
Recent earnings reinforce that view. In its first quarter of 2025, Whitecap pumped 179,051 barrels of oil equivalent per day, 6% more than a year earlier. Its funds flow for the quarter reached $446 million, or $0.75 per share, a 17% increase over Q1 2024. That translated to $48 million in free cash flow, after capital spending, showing real cash left over to finance that monthly payout.
Net income is back on track, too. Q1 net income hit $162.6 million, compared to $59 million a year ago, a big jump . Earnings per share (EPS) came in at $0.28, up from $0.10 in Q1 2024. So not only is cash flowing, but profits are rising nicely as well.
What's happening behind these numbers? Whitecap has been drilling aggressively. It ran 14 rigs in the quarter and drilled 86 wells, spanning both unconventional areas like Montney and Duvernay and more conventional zones. That drilling resulted in production growth, which boosted funds flow and earnings. Whitecap also merged with Veren, creating a larger producer positioned to generate even more cash per share.
The bigger picture here is that Whitecap's dividend is reliable. It has steadily increased payouts over the past few years, from $0.048 per share in early 2021 to the current $0.0608. That gradual increase shows the dividend stock is focused on rewarding shareholders while keeping its payout ratio in check.
Oil and gas stocks carry risk, of course. Prices can swing, and that impacts earnings. Operating costs also matter. But Whitecap has been disciplined. Its net debt is under $1 billion, giving it a debt-to-funds-flow ratio of just 0.6 times. That's strong for a producer. And its cost per barrel is down compared to last year; operating netbacks were $34.21 per boe, up from $31.21. That shows it remains cost-effective.
For income-focused investors, especially those who appreciate monthly payments, Whitecap ticks a lot of boxes. An 8% yield, coverage well within safe limits, consistent growth, and a more defensive balance sheet than many oil plays make it a dividend stock to consider when markets feel unstable.
With its share price down 14%, the yield has gone up, and that can be a sweet spot for investors who buy quality income stocks. If oil prices hold, production stays strong, and spending remains disciplined, it could deliver strong returns. Even if oil dips, the monthly income cushions the blow.
The post Deal Alert: This Canadian Dividend Knight, Down 14%, Offers a Rock-Solid Yield appeared first on The Motley Fool Canada.
More reading
Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS]
Market Volatility Toolkit
Best Canadian Stocks to Buy in 2025
Beginner Investors: 4 Top Canadian Stocks to Buy for 2025
5 Years From Now, You'll Probably Wish You Grabbed These Stocks
Subscribe to Motley Fool Canada on YouTube
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Whitecap Resources. The Motley Fool has a disclosure policy.
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