A 4.7% Yield Pipeline Stock That Could Have a Breakout Year

Pipeline stocks have long been favourites among Canadian investors seeking dependable dividend income and stability. But some of these stocks from the energy sector could also offer attractive upside. And Pembina Pipeline (TSX:PPL) may be entering that category in 2026. The company currently offers an attractive 4.7% dividend yield while continuing to expand its infrastructure network across North America. Its shares have also climbed more than 22% over the last year as investor confidence grows around its long-term strategy.

In this article, I’ll explain why this Canadian pipeline stock deserves a closer look right now.

Pembina stock continues building momentum

Pembina Pipeline, headquartered in Calgary, is one of North America’s top energy transportation and midstream service providers. The company operates a diversified portfolio that includes pipelines, gas processing facilities, fractionation assets, and export terminals. This broad infrastructure network allows it to benefit from growing demand for energy while maintaining relatively stable fee-based revenue streams.

At the time of writing, PPL stock traded at $63.28 per share, giving the company a market cap of roughly $37 billion. The recent surge in the stock can mainly be attributed to investors’ growing confidence in its operational performance and long-term growth strategy.

Notably, its recent financial growth trends have been impressive. In the first quarter of 2026, Pembina reported a 5% sequential improvement in its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to $1.1 billion. At the same time, its adjusted cash flow from operating activities came in at $790 million.

These strong numbers highlight the advantages of the company’s fee-based business model, which gives it stable and predictable cash flow even during periods of commodity market volatility.

The company is also continuing to secure new transportation agreements, and it has added roughly 110,000 barrels per day of capacity on its Peace Pipeline system so far in 2026.

A growing dividend backed by strong cash flow

More importantly for income investors, Pembina recently increased its quarterly common share dividend by 3.5% to $0.735 per share. At current prices, that translates to an attractive annualized dividend yield of approximately 4.7%.

This dividend growth appears well supported by the company’s strong cash flow generation and disciplined financial management. For investors seeking passive income, its dividends look even more attractive when combined with its growth opportunities.

Unlike some traditional high-yield stocks that struggle to expand, Pembina continues investing heavily in future projects to increase earnings and strengthen its infrastructure network. Let’s take a quick look.

Major projects could drive this pipeline stock higher

Pembina has several major initiatives underway that could help it drive long-term value creation. Its recently completed Wapiti Expansion and K3 Cogeneration Facility added natural gas processing capacity to its network while improving operational efficiency and lowering costs.

The company is also progressing with larger projects such as the Greenlight Electricity Centre and the Cedar LNG project. These developments align with Pembina’s long-term strategy, which focuses on capitalizing on rising global energy demand and expanding liquefied natural gas (LNG) and petrochemical opportunities.

The pipeline company expects these initiatives to support 5% to 7% compound annual growth in its fee-based adjusted EBITDA per share through 2030. This long-term earnings visibility could help Pembina stock see share-price appreciation in 2026 and beyond while continuing to support its dividend growth.

The post A 4.7% Yield Pipeline Stock That Could Have a Breakout Year appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has positions in Pembina Pipeline. The Motley Fool recommends Pembina Pipeline. The Motley Fool has a disclosure policy.