If you’re an income investor, the first thing to look for in a stock is its dividend yield. It never ends there, though. Quality dividend is further determined by the stock’s dividend history. A company with a history of strong dividend stability and growth is a stock most investors would be bullish about.
Over the past 3 years, the dividend payouts of Plains All American Pipeline LP (NYSE:PAA) has realized a steady decline of -18.40% per year. However, for the past 1 year, the annualized dividend growth rate shot up to 20%, indicating an admirable gain. With all factors looking favorable, shareholders expect higher dividend payouts in the coming years.
We can’t end the discussion on Plains All American Pipeline LP’s dividend yield without looking at its safety. Knowing this gives a picture of how secure the 8.33% yield is for anyone who may want to pump their money into the stock.
Based on the key dividend safety metrics, Plains All American Pipeline LP (NYSE:PAA) tops the list of the safest dividend yields in the oil & gas industry. Currently, the company’s payout ratio stands at 56.36%, indicating a high dividend sustainability. The Cash Dividend Payout Ratio for the company is 62.78%, a clear show that the company has more than 6 times cash from its operations to pay its dividends. This is a demonstration of a wider safety margin.
Another metric to look at is the company’s Net Long Term Debt/Total Assets, which is currently at 30.05%. This indicates that Plains All American Pipeline LP is less dependent on debts to grow its business. Therefore, Plains All American Pipeline LP (NYSE:PAA) is capable of sustaining the high dividend yield without straining.
Any income investor who’s seeking high, stable dividend yields has every reason to place their bets on Plains All American Pipeline LP.
Plains All American Pipeline LP Profile
Plains All American Pipeline is a publicly-traded master limited partnership in the oil pipeline transportation, marketing, and storage business in the United States, liquefied petroleum gas business in Canada, and natural gas storage business in Michigan and Louisiana. The company has a market capitalization of $12.58 billion, and currently sporting an annual revenue of $33.3 billion.