Gordon Pape: Despite problems, pipeline companies offer stability, high yields

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The industry is one of the best places for income investors to put their money these days

The dream of a game-changing link from Alberta’s oil fields to the U.S. Gulf Coast, was wiped out by a stroke of Joe Biden’s pen as he killed Keystone XL on his first day in office. Energy East, which would have carried western oil to the Maritimes, was vetoed by implacable opposition from Quebec. Northern Gateway, Enbridge’s plan to link Alberta oil with tidewater in northern British Columbia, was derailed by an alliance of environmentalists and indigenous communities.

Only two major new pipelines appear likely to be completed. One is the federally owned Trans-Mountain project, which twins an existing line between Edmonton and B.C.’s lower mainland. The other is Coastal GasLink, a natural gas line being built by TC Energy Corp. that links gas fields in northern B.C. to a new liquefied natural gas terminal in Kitimat.

Enbridge, which recently reported third-quarter results, is currently paying a quarterly dividend of 86 cents a share and that’s expected to rise by at least 5 per cent in February. The yield is 6.2 per cent based on a recent price of $55.47. Pembina Pipeline Corp. recently boosted its monthly dividend by 3.5 per cent, to 21.75 cents to yield 5.6 per cent. The company’s stock was under selling pressure during the pandemic as investors were expecting a dividend cut. It never happened, as management vowed to protect the payout.

 

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