There’s always someone ready to take advantage of someone else’s bad luck. And that’s certainly the case amid the turmoil in Canada’s energy patch.

While many oil and gas producers borrowed heavily to boost growth when times were good, some understood that they would need to preserve capital for when the cycle inevitably turns.

Of course, in this environment, even companies with strong balance sheets and diversified operations are suffering. But they’re not suffering nearly as much as many of their competitors. And that makes all the difference.

The biggest players in the energy sector can afford to take a long-term perspective because they have operations that benefit when energy prices are high, such as exploration and production (E&P), and operations that benefit when energy prices plummet, such as refining.

And diversified operations coupled with prudent financial management mean these firms have the financial strength to scoop up top assets from troubled competitors on the cheap. That’s how the biggest and best firms extend their dominance over the long term.

“Some of the integrated E&P players are actually swimming in cash and need to figure out how to spend a liquidity war chest,” James Jung, an analyst with DBRS, told Bloomberg.

So who’s in the catbird seat on the mergers-and-acquisitions (M&A) front? According to Citigroup, Suncor Energy Inc. (TSX: SU, NYSE SU), which is Canada’s largest oil company and one of our favorite stocks in the sector, could undertake some serious M&A.

And Citi says that Suncor’s strong balance sheet and refining profits put it in one of the best positions to be a major industry consolidator.

In fact, Suncor CEO Steve Williams is looking to put the nearly CAD5 billion in cash on the CAD50 billion firm’s balance sheet to work. “We have too much cash on our balance sheet,” he recently observed. “We’ve been generating more cash than we anticipated when put that $5 billion in the bank.”

However, he also conceded that while Suncor is looking closely at various opportunities, it has “nothing planned” at present.

But as the notion that energy prices could be lower for longer becomes conventional wisdom in corner offices across the sector, this could finally push beleaguered firms to the bargaining table.

Indeed, Williams said that the spread between what Suncor is willing to pay and what distressed firms are willing to accept has narrowed considerably.

Still, he’s willing to be patient for the right deals at the right price, noting that “time is on our side in terms of waiting.”

As for who might be in the crosshairs, Citi says that smaller oil sands producers trading near or below book value might make attractive targets. In particular, analysts cited MEG Energy Corp. (TSX: MEG, OTC: MEGEF) and Canadian Oil Sands Ltd. (TSX: COS, OTC: COSWF), which currently trade at around 0.5 and 0.8 times book value, respectively, as potential takeover candidates.

At the same time, Suncor could opt to return at least some of this cash to shareholders. The firm has certainly done so in the past, with a dividend that’s grown a staggering 23% annually over the past five years.

And it also recently announced plans to buy back as much as CAD500 million worth of shares over the next 12 months. While it could always defer those plans, it’s made good on them in the past, buying nearly CAD900 million worth of shares during the second half of 2014.

Our preference? How about a little of each—M&A, dividends and buybacks—we’re feeling a bit greedy. With a yield of 3.2%, Suncor is a buy below USD27/CAD36.

The Dividend Champions: Portfolio Update

By Deon Vernooy

Sun Life Financial Inc. (TSX: SLF, NYSE: SLF) concluded another relatively small acquisition, with the $975 million purchase of the employee benefit business of Assurant.

Assurant is the 13^th-largest U.S. group benefits provider and serves more than 30,000 employers. This acquisition will put Sun Life in 6^th place among U.S. group benefit providers.

The transaction will be financed with a mix of cash (40%) and debt (60%), increasing the leverage ratio to 25% from 22%. The acquisition is expected to add between 3% and 4% to net income by 2019 once expected synergies of $100 million are realized.

The acquisition price seems to be reasonable, though the full benefits are dependent upon achieving the estimated cost savings. Sun Life is a buy below USD34/CAD45.

Food and general merchandise retailer North West Company Inc. (TSX: NWC, OTC: NWTUF) reported solid second-quarter results. Earnings per share increased by 5.7% compared to a year ago, while the dividend was hiked by 7%.

Overall performance was good, with a 12% increase in revenue and improved gross profit margins. Same-store sales in Canada rose by 4.8%, while the international division (which includes Alaska and the Caribbean) improved by 7.2%.

The only negative for the quarter was the 16% increase in expenses, mainly driven by the translation of U.S. dollar costs into a weaker Canadian dollar and an increase in salary costs. Share-based compensation also jumped, as the cost to the company of these schemes is linked to its share price.

North West is continuing with its strategy of upgrading stores in top-performing markets, while focusing on top-performing sales categories. It plans to spend $70 million on these projects in the current financial year, with the intention of upgrading 11 stores, most of which will be completed in the second half of the year.

With a current yield of 4.6% and a reasonable valuation, the North West Company is one of our favorite Dividend Champions and remains a buy below USD21/CAD28.

Bank of Montreal (TSX: BMO, NYSE: BMO), which is on our Dividend Champions Watch List, has agreed to buy the transportation-finance business of General Electric on undisclosed terms. General Electric is the largest financier of trucks and trailers in North America, with 90% of the book extended in the U.S. and the balance in Canada.

The portfolio held loans and leases of CAD11.5 billion at the end of June 2015. And that should grow by another CAD1 billion by the time the transaction closes, probably in the first quarter of 2016. This will add about 3.5% to the total loan book of BMO.

BMO will finance the transaction with currently available liquidity and wholesale funding. The profits from the loan book are expected to add 3% to net income on an annualized basis.

This looks like a good transaction for BMO since it supports its efforts to geographically diversify its income away from Canada.

BMO does not look expensive at current prices. And with a yield of 4.7% and an impeccable dividend payment track record, BMO is a strong candidate for future inclusion in our Dividend Champions Portfolio.