Energize Your Portfolio With This Canadian Gem

As the global demand for energy rises, energy stocks will have sustainable demand in the years to come, regardless of market conditions. Currently, due to the ongoing Russia-Ukraine war and an energy crisis in various parts of the world, energy stock prices are increasing at a rapid pace. Thus, investors have been well compensated by adding exposure to such companies in recent years.

Of course, energy prices have been on the decline of late. That has meant that shares of even the best energy stocks, such as Suncor (TSX:SU), have been on the decline.

That said, I think the future remains bright for this top Canadian energy stock. Here’s why I think this is a top option for investors to take a defensive position in the market, while being paid a nice dividend yield to do so.

Suncor strikes an $850 million deal with Equinor

Suncor’s management team has been busy of late. Recent reports highlight an impressive deal between Suncor and Equinor, in which the Canadian energy giant will sell off its U.K. holdings. These holdings include the company’s 40% share in the Rosebank oil project along with its 29.9% non-operated stake in the Buzzard oil field.   

As a means of gaining better operating efficiency and managerial focus, this deal makes sense. The company’s interim chief executive officer Kris Smith has remarked that the decision to sell Suncor’s assets in the United Kingdom will help in optimizing its asset portfolio. Moreover, it is also a step forward for the energy company towards selling off its non-core assets and shifting its attention to its downstream business as well as its main oilsands.

Canadian Utilities to buy Suncor’s solar and wind assets

Another key asset divestiture made by Suncor is worth noting. Last year, the company agreed to sell its solar and wind assets to Canadian Utilities in a deal worth $730 million. This deal is supposed to come to a close in the first quarter of 2023. 

Suncor declared in a statement that this deal will help them focus more on hydrogen, renewable fuels and energy expansion. Furthermore, it will also help the company stay on track with its mission to reach net-zero emissions by 2050. 

Bottom line

Suncor remains a top Canadian energy company with a clear focus on its oil sands projects in Western Canada. That’s not to say the company isn’t focused on diversification and vertical integration. But its recent divestitures do suggest that focus is going to be key moving forward.

I like the company’s recent moves and think Suncor stock could outperform in the next one to five years. Thus, this is a stock that remains atop my watch list right now.

The post Energize Your Portfolio With This Canadian Gem appeared first on The Motley Fool Canada.

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Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.