Although the TSX Composite has recently climbed to an all-time high, not every stock is riding the wave. In fact, some fundamentally strong dividend payers are still trading at a discount due mainly to market noise and broader economic uncertainty. One such overlooked dividend stock is currently offering an eye-catching 8.1% yield, making a great combination of consistent income with long-term upside potential. While growth-oriented investors chase momentum, smart, income-focused Canadians may find this overlooked stock too good to ignore.
In this article, I’ll uncover why this high-yield dividend machine deserves a spot in your portfolio and how it could reward you handsomely over time.
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This dividend stock’s not in the spotlight, but it’s been busy
While plenty of stocks are in the limelight amid the TSX Composite’s record run, South Bow (TSX:SOBO) has been working behind the scenes.
Currently trading at $34.65 per share, South Bow has a market cap of $7.2 billion and delivers a hefty 8.1% annualized dividend yield, distributed quarterly. Year to date, SOBO stock is up 2.15%, and it’s still sitting about 24% above its 52-week low.
If you don’t know it already, South Bow owns and operates one of North America’s most critical pieces of energy infrastructure, the Keystone Pipeline System, connecting Alberta’s oil supply to major U.S. refineries.
In the first quarter of 2025, the company moved an impressive 613,000 barrels per day on the Keystone Pipeline, with operational reliability of 98%. And on its U.S. Gulf Coast segment, volumes touched 726,000 barrels per day.
That’s not just efficient — it’s resilient, especially considering the pipeline resumed operations shortly after a brief incident in April near Fort Ransom, North Dakota. South Bow swiftly resumed flow within a week and has begun remediation and long-term improvements. That solid track record is exactly why investors have remained interested, even amid volatility in the energy sector.
Stable growth, even in a tough market
In the latest quarter ended in March, South Bow generated $498 million in revenue and posted adjusted earnings of $0.47 per share. At the same time, there was a slight dip in these financial metrics compared to the previous quarter, which was largely due to softer demand for uncommitted pipeline capacity, a short-term issue tied more to macro trends than company performance.
More importantly, the company reported $266 million in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), with margins holding strong. South Bow also delivered $151 million in distributable cash flow, reflecting its ability to support its generous dividends.
Big plans make this stock worth owning
So, what makes South Bow a “must-have” from a long-term perspective? The dividend is just the beginning. With major spending on the Blackrod Connection, expected to go live in early 2026, the company is gearing up for new cash flow next year and more upside over time.
Even better, about 90% of South Bow’s EBITDA is locked in through committed agreements, which tend to shield the company from oil price swings and volume unpredictability. That’s the kind of reliability most energy investors dream of.
