Canadian Natural Resources (TSX:CNQ) is down about 7% in the past six months. Investors who missed the big rally early in the year are wondering if CNQ stock is now undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) focused on dividends and total returns.

CNQ stock price

CNRL trades near $48 per share at the time of writing. The stock was as high as $56 in April but has trended lower on weaker energy prices in recent months.

The company is Canada's largest energy producer on the TSX, with a current market capitalization near $100 billion.

Operations

CNRL is somewhat unique in the Canadian energy sector due to the diversified nature of its production operations. The company is best known for its oil sands production, but CNRL also has conventional heavy oil, light oil, offshore oil, natural gas, and natural gas liquids assets. In most cases, CNRL is the sole owner of the assets. This gives management the flexibility to move capital around the portfolio relatively quickly to take advantage of the best opportunities in the market.

CNRL has a long track record of driving growth through strategic acquisitions. The company recently announced a deal to buy assets from Chevron Canada for US$6.5 billion in cash. The assets include a 20% interest in the Athabasca Oil Sands Project (AOSP), bringing CNRL's stake in AOSP to 90%. The other assets include Chevron's 70% working interest in light crude oil assets in the Duvernay play located in Alberta.

Opportunities

The completion of the Trans Mountain pipeline expansion earlier this year is giving CNRL, and its peers added capacity to move oil to international markets via British Columbia. This should help narrow the price differential between Western Canadian Select and West Texas International, which has hurt Canadian producers in the past due to pipeline bottlenecks.

At the same time, the opening of the Coastal GasLink natural gas pipeline in 2025 will give producers access to international markets through a new liquified natural gas (LNG) facility being built on the coast of British Columbia.

Dividends

The addition of the newly acquired assets will boost cash flow and is part of the reason CNRL has announced a 7% dividend increase for 2025. This marks the 25th consecutive year of dividend hikes for the company. That's an impressive track record in a sector that relies on the fluctuations of commodity prices. CNRL's diversified assets and its ability to make strategic acquisitions at opportune times have provided the support needed to raise the dividend steadily, even during difficult times in the oil and gas markets.

At the time of writing, CNRL stock provides a dividend yield of 4.7%.

Risks

Weak oil demand from China and rising production in countries like Canada and the United States are expected to result in supply surpluses in the coming year. This could extend the recent pressure on oil prices for some time. A wave of new LNG supplies on the global market could also impact prices, even as demand is expected to remain robust as countries look to secure reliable supplies of natural gas to fuel power-generation stations being built to meet growth in electricity demand.

Should you buy CNQ now?

Near-term headwinds might persist for energy prices. That being said, CNRL pays an attractive dividend that should continue to grow, even during times of lower margins. If you are an energy bull and have some cash to put to work, this stock deserves to be on your radar for a buy-and-hold dividend portfolio.