Investing in quality dividend stocks with a consistent growth profile is a proven strategy to generate a consistent stream of dividend income and long-term capital gains.

One such TSX dividend stock with a forward yield of over 6% is Whitecap Resources (TSX:WCP), which acquires and develops petroleum and natural gas properties in Canada. Whitecap is among the most popular dividend stocks on the TSX, with more than 700,000 barrels of oil equivalent in proved plus probable reserves. Let's see why.

Whitecap's strong performance in Q3

Whitecap delivered strong operating results while maintaining a robust dividend program in the third quarter (Q3) of 2024. Its production of 173,302 barrels of oil equivalent per day in the September quarter exceeded initial guidance.

Strong production in Q3 allowed Whitecap to report an adjusted funds flow of $409 million, or $0.68 per share, while its free funds flow stood at $136 million, which indicates it spent over $270 million in capital expenditures.

In the first nine months of 2024, its free funds flow totalled $136 million. Notably, the company distributed around $225 million to shareholders in Q3 via dividends and buybacks. Whitecap also ended the quarter with a net debt of $1.4 billion, indicating a debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio of just 0.6 times.

Its free cash flow and dividend expense indicate Whitecap's payout ratio is roughly 80%, providing it with the flexibility to reduce long-term debt and strengthen the balance sheet. Its capital expenditures should also drive future earnings and cash flow higher, making the TSX stock a top investment choice for passive-income investors.

What's next for the TSX dividend stock?

Whitecap Resources has provided strong guidance as it expects production to expand by 5% annually to 178,000 barrels of oil equivalent per day in 2025. Moreover, it aims to spend over $1 billion in capital expenditures, while funds flow is forecast at $1.65 billion.

Armed with an investment-grade balance sheet, Whitecap is looking to issue bonds and diversify its debt structure as it focuses on operating efficiencies amid a challenging macro environment.

Analysts tracking WCP stock expect the company to end 2025 with an adjusted funds flow per share of $3.13, up from $2.89 in 2024. It indicates that Whitecap should continue to expand its dividend payout over the next 12 months. Whitecap pays shareholders a monthly dividend, which has more than quadrupled since the COVID-19 pandemic.

Given consensus price target estimates, Whitecap trades at a discount of 35% right now. If we include its dividends, total returns could be over 40%. WCP stock has returned 100% to shareholders in the last five years. However, cumulative returns are closer to 170% if we account for dividend reinvestments.

The bottom line

Whitecap Resources continues to execute its operational and financial objectives effectively. The combination of growing production, strong shareholder returns, and a conservative balance sheet positions the company well for 2025 and beyond.

A widening base of cash-generating assets and a disciplined capital-allocation strategy suggest that Whitecap appears well-positioned to maintain its strong performance. Moreover, its commitment to both dividends and share buybacks offers investors multiple ways to benefit from Whitecap's success.