Pembina Pipeline (TSX:PPL) is among the top pipeline stocks I don’t think gets enough love. There are reasons for this, with other prominent players in the energy infrastructure space generally taking up significant mind share for investors, and for good reason.
That said, I think Pembina is an intriguing stock trading around 15% below the company’s all-time high of roughly $60 per share. Let’s dive into what to make of this stock at current levels and whether Pembina is worth adding as a long-term hold right now.
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What do the fundamentals say?
Pembina is among the leading Canada-based pipeline companies providing extensive exposure to the energy sector in a much less volatile fashion than many energy producers. With a robust and integrated network of pipelines, export terminals and processing facilities, Pembina stands as a top option in this space for investors seeking defensive exposure in this market.
That said, the company’s fundamentals really stand out to me as a key reason why this is a stock that ought to be considered. In the company’s first quarter, Pembina reported strong revenue and earnings growth, with top-line revenue rising a whopping 58%. The pipeline giant’s earnings per share rose nearly 10% on this report, as Pembina’s profitability and efficiency initiatives also flowed through to the bottom line.
Yes, I would like to see more bottom-line growth from Pembina over time. But with this earnings surge, the company’s dividend yield of 5.6% looks much more stable, and should position long-term investors well for whatever environment is ahead.
The verdict
Of course, I’m always on the lookout for stocks that have been unfairly beaten up. I don’t think that’s the case with Pembina at this juncture, considering the stock is pretty close to trading near its all-time high.
That said, at this discount to Pembina’s previous high, I can certainly see a strong case for why investors may want to consider this energy infrastructure play. In my books, Pembina is a top pipeline operator worth considering for those looking for more defensive dividend stocks in this environment.
