Cenovus stock rises over 10% as the company boosts its dividend by 11% for Q2 2025, signaling resilience despite falling oil prices and rising debt.
Cenovus Energy saw its shares surge by more than 10 percent on Thursday after announcing an 11 percent dividend hike, even as oil prices continue to decline. The move signals the company’s confidence in its financial stability amid market volatility.
Dividend Raised to $0.80 Per Share for Q2 2025
The Calgary-based oil and gas producer increased its annual shareholder payout from $0.72 to $0.80 per share, beginning in the second quarter of 2025. Despite weaker crude markets, Cenovus stated that its dividend remains sustainable at West Texas Intermediate (WTI) prices as low as US$45 per barrel.
This announcement comes as WTI prices have dropped more than 20 percent since April, driven by accelerated OPEC+ production and heightened global trade uncertainty.
Market Reacts Positively Amid Downward Oil Trend
On Thursday, Toronto-listed Cenovus shares closed at $17.78, up 9.15 percent. The stock had previously fallen more than 25 percent year-to-date, making this a notable rebound.
Investor sentiment was also lifted by expectations of diplomatic progress in U.S.-China trade talks and a potential U.S.-UK trade agreement, contributing to a 2 percent rise in WTI prices on the same day.
Earnings Beat Despite Falling Net Income
Cenovus reported first-quarter net income of $859 million, down from $1.18 billion a year ago, but still beat analyst expectations. The decline reflects lower oil prices, but the company emphasized long-term stability.
Chief Executive Officer Jon McKenzie told analysts that Cenovus remains “well-positioned in any reasonable commodity price scenario,” and reaffirmed its focus on dividend growth and downstream expansion.
Capital Spending Set to Decline as Projects Wrap
The company’s capital investment for 2025 is projected between $4.6 billion and $5 billion, but officials anticipate that figure will drop in 2026.
“I think somewhere in that low $4 billion range is a good starting point,” said Chief Financial Officer Kam Sandhar, noting that major development projects are nearing completion.
In the first quarter, Cenovus returned $595 million to shareholders through dividends, share repurchases, and preferred share redemptions.
Debt Increases But Analyst Confidence Remains High
Cenovus reported a $456 million rise in net debt, bringing its total to $5.1 billion—above its target of $4 billion. However, executives stressed that future buybacks and a tapering of capital expenditures will help reduce debt and boost shareholder returns.
Analyst Kevin Fisk of Scotiabank maintained a $27 price target with a “sector outperform” rating. Greg Pardy of RBC Capital Markets also held an “outperform” rating with a $25 price target, citing strong fundamentals and consistent performance.
Outlook: Stability Amid Market Uncertainty
Despite global pressures on oil prices, Cenovus has positioned itself as a resilient player through strategic capital management and shareholder-focused policies. With continued investment discipline and earnings momentum, the company aims to sustain returns even in a challenging energy market.
Stay tuned to Maple News Wire for the latest updates on Canadian energy, markets, and corporate strategy.
