This Energy Stock Pays an 8% Dividend (And It's Safe)

Plains All American Pipeline has taken steps to further safeguard its payout this year.

, and Administrator

2025 December 22 . 10:17 AM

1 min read

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This Energy Stock Pays an 8% Dividend (And It's Safe)

Plains All American Pipeline (PAA) has strengthened its financial position through recent deals and strategic adjustments. The company, a master limited partnership specialising in oil pipelines, now expects higher stability in its earnings and improved dividend coverage.

The moves come as PAA maintains a dividend yield of over 8%, well above the S&P 500’s current average of around 1%.

PAA recently completed a two-phase acquisition of the Epic Crude Oil Pipeline for $2.9 billion. In October 2024, Brookfield Infrastructure Partners purchased a 55% stake in the same pipeline, further reshaping PAA’s asset portfolio.

The sale of its Canadian NGL assets has also played a key role in the company’s financial strategy. After this divestment, PAA anticipates that about 85% of its earnings will come from stable sources, up from the previous 80%. The remaining 15% will be tied to variable activities.

With these changes, PAA expects its leverage ratio to settle near the mid-point of its 3.5 times target range. The company’s dividend coverage ratio is projected to reach around 1.8 times this year. Looking ahead, PAA aims to grow its dividend by roughly 10% annually until it achieves a coverage level of 1.6 times.

The adjustments are designed to boost financial flexibility while maintaining a strong yield for investors. PAA’s current dividend yield remains significantly higher than broader market averages, offering a secure return in a low-yield environment.

PAA’s recent transactions and financial targets suggest a focus on stability and shareholder returns. The company’s dividend yield stays above 8%, backed by a higher share of predictable earnings. These steps are expected to support steady dividend growth in the coming years.