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Oil and gas stocks are a significant component of the Canadian stock market, particularly on the TSX. As of 2023, the energy sector, which is heavily dominated by oil and gas companies, accounts for about 15-20% of the TSX. Over the past decade, Canadian oil and gas stocks have experienced considerable volatility, with annual returns ranging from a fall of 30% during downturns, such as the 2020 oil price crash, to over 50% in boom years like 2021-2022, when energy prices surged.
Yet dividend yields in this sector still tend to be relatively high. With many Canadian oil and gas companies offering yields between 4-6%. This makes them attractive to income-focused investors. However, the sector’s performance is closely tied to global oil prices, economic cycles, and regulatory changes. This can lead to significant fluctuations in stock prices and returns. So, perhaps it’s time to look elsewhere.
