Canada certainly has a few pipeline operators (or energy infrastructure companies, as many choose to call them) to choose from. I do like a few different energy infrastructure players right now. But from a dividend perspective, Pembina Pipeline (TSX:PPL) is my top dividend pick in this sector for 2020.
Pembina is one of those rare companies that checks a lot of boxes for me. The pipeline operator has a number of upstream and downstream assets and opportunities, providing investors with a unique diversified offering.
In December, the company closed on an acquisition. Expectations are that Pembina’s management team will not forego any opportunities that may make themselves available in the years to come, making this energy infrastructure a quasi-growth via acquisition play.
The company’s assets are geographically diversified as well, providing additional long-term stability for investors with an investing time horizon longer than a few years.
These assets support a current 4.8% dividend yield. This is a juicy dividend yield when one considers how low bond rates have gone of late.
This 4.8% yield is expected to drop, generally, by many who believe the stock market will begin to properly price Pembina’s shares (in a similar fashion at least to some of its high-quality competitors).
That said, Pembina has been consistent in raising its dividend in the mid-single digits every year, so I’m expecting to see both dividend growth as well as capital appreciation for Pembina over the next 10 years, as the market finally realizes the value of a cash flow machine like this and acts accordingly.
Invest wisely, my friends.
