People nowadays talk about retirement accounts specifically the amount needed to live comfortably during the sunset years. They compare notes on how to build wealth to secure their financial futures. But it all comes down to the choice of the investment instrument.
Only one company comes to mind when I’m thinking about a potential long-term investment. If the primary objective is to create wealth not only for retirement, but also for other purposes, Pembina Pipeline Corporation (TSX:PPL)(NYSE:PBA) is an overwhelming buy. Why complicate matters when you can cut to the chase?
Here are three reasons to support my contention that Pembina Pipeline is an “invincible” investment prospect.
The size of the company matters to me when I’m scouting for the best investment opportunity. Pembina Pipeline is a $25.44 billion energy infrastructure company. With that significant size and scale, you can already conclude that the company is a prominent industry player if not the industry leader.
The company would not have grown that big if the business strategy did not deliver profitable growth. Last year’s performance was very impressive. Revenue increased by 36.12% to $7.3 billion and a corresponding 44.7% increase in net income to $1.3 billion.
As we’re talking at the present, I’m not exaggerating when I say that I want my financial resources to grow as much– maybe not to a billion but adequate enough to answer for my financial needs in the future. Pembina Pipeline’s financial stability is incontestable, which should be a major consideration.
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Pembina Pipeline definitely built something extraordinary in North America’s energy industry during the 60 years of operations. Today, the company stands tall because of the all-important integrated value chain for natural gas, natural gas liquids, crude oil, and condensate the sector needs.
The earning potentials and growth prospects are nothing short of spectacular. Pembina has a long and strong growth runway. There are two ongoing projects worth $650 million and $5.5 billion worth of secured projects under development that will run until 2023.
Profits are stable and predictable since the revenues from the majority of the projects are fee-based. The projects will fuel growth and result in record financial results in the near-term and beyond. Also, the demand for energy will not diminish and Pembina will be around for decades if need be.
Excellent track record of dividend payments
Finally, the most important attribute of Pembina is its excellent history of dividend payouts. There’s no denying the sustainability of dividends. The strong cash flow growth can easily support dividend payments and growth.
The stock is the best-in-class because the dividends are paid out monthly. Investors will have an income stream to cover for monthly expenses if that’s your intention. Otherwise, you can continue reinvesting the dividends to realize the compounding effect over time. The current dividend yield is a high 5.00%.
There are countless reasons to substantiate my argument that Pembina Pipeline is an overwhelming buy. But I need not add them, as the reasons I’ve cited are the real measures.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Christopher Liew has no position in any of the stocks mentioned. Pembina is a recommendation of Dividend Investor Canada.