Gibson Energy (TSX:GEI) is proving to be a standout dividend stock – and at a time when uncertainty looms over Canada’s energy sector. With President Trump reintroducing tariffs on Canadian crude oil imports, the pressure is mounting on companies that rely on cross-border trade. However, Gibson Energy is a mid-cap stock with a strong infrastructure base, plus a history of reliable dividend payments. It’s therefore well-positioned to weather these challenges. Investors looking for stability in a volatile market might find this stock an appealing choice.
Why Gibson
The energy sector has faced its fair share of challenges in recent years. And Trump’s latest tariffs have added yet another layer of uncertainty. The United States remains heavily reliant on Canadian oil, particularly the heavy crude that its refineries are built to process. Despite this, the introduction of a 10% tariff on Canadian crude could create short-term disruptions, thereby increasing costs for U.S. refiners and potentially putting downward pressure on Canadian oil prices. This has led to concerns about profitability for Canadian energy producers, but Gibson Energy operates in a niche that helps shield it from the worst of these effects. The company is primarily involved in energy infrastructure and logistics, providing essential services such as storage and transportation rather than direct oil production. This places it in a unique position to remain stable even as market conditions shift.
Recent earnings reflect Gibson Energy’s resilience. In its latest quarterly report, the company posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $610 million. This growth comes despite a 16.1% year-over-year decline in revenue, highlighting Gibson’s ability to maintain profitability, even when overall industry conditions are less than favourable.
Gibson Energy recently announced a 5% increase to its dividend, bringing its quarterly payout to $0.43 per share. This marks the sixth consecutive dividend increase for the company, further reinforcing its commitment to returning value to shareholders. With a forward annual dividend yield of 8%, Gibson stands out as one of the more generous dividend payers in the mid-cap energy space.
More dividends to come
The company’s balance sheet remains solid despite recent challenges. Gibson reported total cash holdings of $57 million and a total debt load of $2.7 billion. While the company’s debt-to-equity ratio is relatively high at 272%, this is not uncommon for infrastructure-heavy energy firms. The company’s ability to generate consistent cash flow suggests that it is well-equipped to manage its obligations while continuing to fund growth initiatives and maintain dividend payments. The payout ratio of 176% might raise some eyebrows. Yet given the company’s steady cash flow and long-term contracts, it remains in a sustainable position.
The introduction of tariffs could create some short-term headwinds for Gibson Energy, but its long-term outlook remains positive. Infrastructure companies like Gibson tend to perform well in both high and low oil price environments because their services remain in demand, regardless of fluctuations in commodity prices. If tariffs do lead to lower oil prices in Canada, storage demand could actually increase, as producers look for options to hold onto their supply rather than sell at a discount. This could provide an unexpected boost to Gibson’s operations, reinforcing its role as a critical player in the industry.
For investors considering adding a mid-cap energy stock to their portfolio, Gibson Energy presents a compelling case. The dividend stock has been trading within a 52-week range of $20.83 to $26.10, meaning that at its current price of around $21.68, it is closer to its lower end. This could present a buying opportunity for those looking to lock in an attractive yield before any potential recovery. With its strong infrastructure presence, continued earnings growth, and reliable dividends, Gibson Energy remains a standout choice in the Canadian market.
Bottom line
As Canada faces the reality of new trade barriers, it becomes even more important for investors to focus on companies with durable business models and strong financial foundations. Gibson Energy fits this profile well, offering stability, income, and potential for future growth even in uncertain times. Whether tariffs persist or get rolled back, Gibson’s role in Canada’s energy landscape ensures that it remains a must-watch stock for long-term investors.
