The Israel-Iran war in June 2025 rattled global stock markets and intensified U.S. tariff-driven volatility. Oil prices surged as missiles struck Iran’s vital oil and gas facilities. Fortunately, the war ended in 12 days.
While many people scrambled for safer assets, a pipeline stock remained unshaken amid the turmoil in the Middle East. Keyera (TSX: KEY) advanced 4% from June 13 at the start of the conflict until the ceasefire agreement on June 24. The $9.8 billion Canadian midstream energy company even raised $2.1 billion in equity offerings on June 20 in preparation for the transformative acquisition of Plains All American Pipeline’s Canadian natural gas liquids (NGL) business.
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Scale-changing mega deal
Keyera is a standout choice for growth and dividend investors in 2025, owing to a clear, long growth runway following the mega deal. Its President and CEO, Dean Setoguchi, said, “This is a highly strategic acquisition that strengthens our core business and accelerates our growth trajectory.” BMO Capital describes the acquisition as a “scale-changing” event.
The transaction is also expected to strengthen the dividend growth profile of this energy stock. As of this writing, KEY trades at $42.86 per share and pays a lucrative 4.9% dividend. Based on market analysts’ 12-month price targets, the upside potential ranges from 18% to 40%.
Win-win arrangement
Setoguchi admitted that Keyera has long been eyeing Plains’ large-scale NGL business. After six months of negotiations, the American firm agreed to sell its wholly owned Canadian subsidiary and select U.S. assets for $5.2 billion, opting to be a pure-play crude oil midstream play.
Included in the sale is pipeline infrastructure extending more than 2,400 kilometres, producing over 575,000 barrels a day. Keyera hopes to generate $100 million in savings upon closing the deal in Q1 2026 and anticipates that this will also enhance distributable cash flow by a mid-teen percentage in the first year.
Largest acquisition
Keyera’s major move complements its strong start to 2025. The assets in the pipeline power shift include extraction, fractionation, and storage operations, as well as rail and truck terminals in Alberta, Saskatchewan, Manitoba, and Ontario. Setoguchi emphasized that the deal not only repatriates important energy assets in the country but also that cash flows from the acquired operations will be reinvested in Canada.
In Q1 2025, net earnings climbed 83.8% to $130.3 million compared to Q1 2024. According to Setoguchi, the first quarter results underscore the strength and competitiveness of Keyera’s integrated value chain. Notably, the fee-for-service realized margin increased 9% year-over-year to $262 million.
The steady growth in stable, fee-based cash flow would enable future dividend increases. Keyera has consistently paid dividends since 2003, although the payout frequency changed from monthly to quarterly starting in 2023.
Canada takes centre stage
The Plains deal expands Keyera’s position and widens its reach from Western to Eastern Canada. Besides gaining more flexibility in market access and multiple growth catalysts, there’s immediate value for shareholders. However, the bigger picture is that Canada takes center stage as a global energy leader.
Keyera has strengthened its domestic infrastructure. More importantly, the deal should help unlock the full potential of the country’s energy future. Its most sizeable transaction ever could translate into sizeable gains and sustainable dividend payments for investors. I recommend taking a position in KEY now before the impending breakout.
