Over the years, I’ve learned that great dividend stocks do more than just pay you. They support their payouts with strong, cash-generating businesses and have the ability to weather economic cycles. That combination is rare, but when you find it, it’s worth holding onto.
Pembina Pipeline (TSX: PPL) is one such top dividend stock listed on the TSX. Its dividend isn’t only attractive on paper with a 5.6% yield, but it’s supported by a strong business and a steady stream of income. Even better, it just raised its payout again. In this article, I’ll highlight why Pembina has earned a permanent spot in my dividend portfolio and why it might deserve a spot in yours, too.
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Why Pembina continues to be my go-to for stable income
As a top energy infrastructure company based in Calgary, Pembina connects producers and end-users through a large network of natural gas and hydrocarbon systems.
After falling by around 5% so far in 2024, PPL stock currently trades at $50.40 per share, giving it a market cap of $29.3 billion. It also pays a quarterly dividend that translates into an annualized yield of 5.6%, which is among the most attractive payouts in Canada’s large-cap space. The company recently raised its quarterly dividend by 3%, a move that clearly showed confidence in its future earnings and cash flow.
Recent numbers show strong growth
Despite the weak macroeconomic environment, Pembina reported solid results for the first quarter of 2025. During the quarter, its total revenue rose 48% YoY (year-over-year) to $2.3 billion, while its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed 12% from a year ago to $1.2 billion. Similarly, its adjusted quarterly earnings climbed by 9.6% YoY to $0.80 per share.
This strong financial growth could be attributed to the contribution from each of Pembina’s business segments. For example, its pipelines division posted a 13% YoY rise in EBITDA with the help of higher tolls and increased contracted volumes on its core systems. Similarly, the company’s facilities segment saw an 11% YoY increase, driven by its expanded ownership in Aux Sable and higher activity from recent acquisitions. Meanwhile, its marketing segment added another 12% YoY with strong margins and increased NGL (natural gas liquids) volumes from Western Canada.
Major growth plans highlight its long-term value
Strong quarters are great, but what makes Pembina a true cash cow is its forward strategy. It isn’t just maintaining its assets but actively growing them. Notably, the company is currently pushing ahead on several large infrastructure projects, including the RFS IV fractionation facility, the K3 Cogeneration plant, and the Wapiti Expansion, all of which aim to handle rising volumes from Western Canada. These assets are expected to boost Pembina’s fee-based revenue while reducing its exposure to commodity prices.
Moreover, Pembina is also securing new long-term agreements with major producers in the Montney region, locking in future volume commitments across its pipelines and fractionation systems. These deals are built on take-or-pay (agreements that guarantee payment regardless of usage) terms, which offer protection even when market conditions are uncertain.
Given these solid fundamentals and the long-term growth outlook, it’s easy to see why I’m happy to hold this top dividend stock for the long term.
