The oil and gas industry is starting to pick up steam again, and you may want to lock in a position now before stock prices take off. Pembina Pipeline Corp (TSX:PPL)(NYSE:PBA) is one stock that can help provide your portfolio with capital appreciation and a great dividend over the long term.
Currently, the stock’s monthly dividend of $0.18 per share is yielding investors over 5% per year. The company also has a great track record for growing its payouts, and it has even done so during the downturn in the industry. In 2013, payouts were $0.135 and have grown by 33% since then, for a compounded annual growth rate of just under 6%, and the dividend could be due for another hike this year.
Year-to-date the share price is down 8%, but with oil prices on the rise and the stock trading at less than twice its book value, it could be a great value buy today. Although growth in the industry has run into political barriers in Canada and many people have a negative outlook on pipelines in general, we’re starting to see governments understand the importance of helping the industry recover, and that could help facilitate future growth.
As oil prices continue to rise, Pembina and other oil and gas stocks will see their financials get stronger, and that will be a recipe for higher share prices as well. Investors that aren’t afraid to invest today will have an excellent opportunity to cash in on some strong capital appreciation as the industry continues to recover, and in the case of Pembina, will be able to pad that with a great dividend as well.
