Suncor Raises Dividend on Strong Q3 Earnings

Suncor Energy (TSX: SU)(NYSE:SU) recently reported a robust third quarter in 2024, reflecting both operational excellence and strategic financial management. Key highlights include significant increases in production, a new record in refining throughput, and an increased dividend for shareholders.

Record Financial Performance: Suncor generated $3.8 billion in adjusted funds from operations, with $2.2 billion in free funds flow, enabling a dividend hike and substantial shareholder returns.
Enhanced Shareholder Returns: The company returned $1.5 billion to shareholders, including $800 million in share repurchases and $700 million in dividends, marking a solid yield amid ongoing operational improvements.
Operational Efficiency Peaks: Suncor achieved a record refining throughput of 488,000 barrels per day, with 105% refinery utilization, supporting strong refined product sales of 612,000 barrels per day.

Financial Highlights

Suncor’s Q3 2024 performance demonstrated financial strength:

Net Earnings reached $2.02 billion, or $1.59 per share, surpassing the prior quarter’s $1.568 billion and the Q3 2023 figure of $1.544 billion.
Adjusted Operating Earnings were $1.875 billion ($1.48 per share), a slight year-over-year decline from $1.98 billion due to lower realized crude oil prices. However, increased sales volumes and refined product margins partially offset this dip.
Cash Flow from Operating Activities rose to $4.26 billion, up from $3.83 billion in the previous quarter, supported by high refinery utilization and production.

Operational Excellence

Suncor’s operational efficiency continued to improve, driven by key metrics:

Record Refining Throughput of 488,000 bbls/d was achieved, with refinery utilization reaching 105%. This boost translated into 612,000 bbls/d in refined product sales, the third consecutive quarter of record sales.
Upstream Production surged to 829,000 bbls/d, an increase over Q3 2023’s 690,500 bbls/d, supported by strong performance across Suncor’s Oil Sands segment and a 99% upgrader utilization.
Debt Reduction Goals Met: The company achieved its net debt target of $8 billion ahead of schedule, enabling a policy shift toward returning 100% of excess funds to shareholders, underscoring Suncor’s commitment to financial discipline.

Dividend and Shareholder Returns

In response to these results, Suncor’s Board of Directors approved a 5% increase in the quarterly dividend to $0.57 per share. This decision reflects growing confidence in Suncor’s operational stability and free funds flow, as well as the company’s commitment to enhancing shareholder value. In total, Suncor returned $1.5 billion to shareholders in the quarter, including $700 million in dividends and $800 million in share repurchases. With the dividend hike, the stock is now yielding 4.1%.

Strategic Outlook

Suncor’s focus on operational reliability, cost management, and debt reduction has positioned the company well for sustained financial health and shareholder returns. With debt targets met, the company now channels all excess funds back to shareholders, marking a new phase in its capital allocation strategy.

Suncor’s impressive earnings, commitment to increased shareholder returns, and demonstrated resilience in refining and production operations make it an attractive investment for dividend-focused investors and those seeking exposure to well-managed energy assets. Year to date, shares of Suncor are up more than 34%.