A 3.9% Yield Pipeline Stock That Could Have a Breakout Year

If you want a pipeline stock that pays you to wait while a major growth catalyst plays out, Keyera (TSX:KEY) deserves a close look. The Calgary-based midstream company offers a 3.9% dividend yield, a fortress-like balance sheet, and what may be its most consequential year since going public. I think this is one of the better income-and-growth setups in the Canadian energy sector right now.

Why the Plains acquisition is key for the TSX energy stock

The biggest catalyst for Keyera is the recently closed acquisition of Plains Midstream Canada’s natural gas liquids business.

It is a system-expanding transaction that turns Keyera into a true coast-to-coast NGL (natural gas liquids) operator, extending its integrated value chain from Alberta to Eastern Canada and the United States.

President and CEO Dean Setoguchi called the deal “transformational,” saying it “makes us more efficient, extends our integrated value chain into Eastern Canada and the U.S., and creates a platform for accelerated capital-efficient growth.”

In plain terms: Keyera now has more pipes, more reach, and more ways to get Canadian producers their money. Keyera is a service company, and its value proposition to producers is to transport their natural gas liquids to the highest-value markets, as cheaply and reliably as possible.

The Plains assets give Keyera more routing options, greater redundancy across its fractionation complexes, and improved access to global markets, including Asia, through a recently signed commercial agreement with AltaGas.

A top TSX dividend stock

Notably, Keyera raised the dividend by 4% in 2025 and has increased the payout at a compounded annual growth rate of 6% since 2008. Its distributable cash flow per share has compounded at 7% annually over the same period.

The balance sheet is in equally good shape. The Canadian dividend stock exited 2025 below the low end of its own leverage target and continues to hold an investment-grade credit rating.

Beyond the Plains acquisition, Keyera sanctioned several high-conviction projects in 2025, which should support future dividend hikes.

• These include the Frac II debottleneck, the KFS Frac III fractionation expansion, and the KAPS Zone 4 pipeline extension into northeast British Columbia and northwest Alberta. All are underpinned by long-term contracts with producers tapping into the liquids-rich Montney formation.
• Keyera also completed the acquisition of the Simonette Gas Plant for approximately $200 million, adding roughly 68 million cubic feet per day of processing capacity. And it recycled capital by divesting the non-core Wildhorse terminal.

The Foolish takeaway on Keyera stock

The case for Keyera in 2026 is straightforward. You get a 3.9% yield backed by 27 years of uninterrupted dividends, a business model built on fee-for-service cash flows that hold up through commodity cycles, and a recently expanded platform that positions the company to grow faster and more efficiently than it could a year ago.

The Competition Bureau review of the Plains deal is ongoing, and Setoguchi was careful not to comment directly on that process at the annual meeting. But the deal’s operational logic is sound, and management’s track record of execution is hard to argue with.

For Canadian income investors looking for a durable, growing dividend backed by real infrastructure, Keyera looks like one of the clearest calls in the midstream space right now.

The post A 3.9% Yield Pipeline Stock That Could Have a Breakout Year appeared first on The Motley Fool Canada.

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Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Keyera. The Motley Fool has a disclosure policy.