Keyera (TSX: KEY) may be underperforming the TSX Composite Index in 2025, but that doesnât change its long-term appeal. The stock has gained 1.2% year to date, compared with the indexâs 7.4% rise, and is currently trading at $44.47 with a $10.2 billion market cap. That mixed performance follows a strong four-year run when Keyera stock gained 94%.
In this article, Iâll cover three big reasons why Keyera stock remains a must-buy for investors who care more about long-term consistency and dividend income than short-term spikes.
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Infrastructure expansion efforts
The first main reason Keyera stock looks like a smart buy today is the massive infrastructure expansion itâs rolling out. Last month, the company gave the green light to build the KFS Frac III project, which is a huge addition to its Fort Saskatchewan facility. Itâs expected to boost its fractionation capacity by around 60% once itâs done by mid-2028. And itâs not just a vague goal either, since most of this new capacity is already backed by solid, long-term contracts with strong counterparties.
That could be a big deal for anyone who wants stability in their investments as this expansion is built around demand thatâs already there, and it fits perfectly into Keyeraâs strategy to grow its fee-for-service earnings.
Strong cash flow and a healthy dividend
The second big reason to like Keyera stock right now is the way it consistently generates cash and rewards shareholders. In the first quarter of 2025, Keyera brought in $190 million in distributable cash flow, enough to easily cover its $0.52 per share dividend. Similarly, its payout ratio stayed at a comfortable 63%, clearly reflecting that the company isnât overextending itself.
With its current annual dividend yield close to 5%, this stock could help you create a reliable source of passive income. And due to the gradual growth in its fee-for-service revenue, those dividends still have room to grow over time.
A deal that could accelerate its growth
The third key reason Keyera stock looks even more promising now is its recently announced game-changing $5.2 billion acquisition of Plainsâ Canadian natural gas liquids (NGL) business. This move is likely to massively expand the companyâs reach and give it a strong position across the entire NGL value chain, from western Canada all the way to eastern markets.
Moreover, the new assets are backed by long-term customer agreements and are expected to increase Keyeraâs fee-based EBITDA (earnings before interest, taxes, depreciation, and amortization) by around 50% in the first year after closing. Thatâs a major step up in scale, and it gives Keyera more options to grow.
Foolish takeaway
At first glance, Keyera stock may not seem like the most exciting pick. But once you look at its infrastructure expansion efforts and strategic acquisitions, it becomes clear that the company is gearing up for years of strong growth.
With expanding capacity, strong dividends, and smart acquisitions, Keyera is doing a lot right today. Given that, this energy stock could turn out to be a great performer in the long run, especially for long-term investors looking for consistency and healthy upside potential.
