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

Core Viewpoint - Plains All American Pipeline is enhancing its financial stability and dividend safety through strategic asset sales and acquisitions, positioning itself as a high-yield dividend stock with a current yield exceeding 8% [1][3][7] Group 1: Financial Performance and Dividend - The company currently offers a dividend yield of 8.66%, significantly higher than the S&P 500's average of about 1% [1][6] - Plains expects its dividend coverage ratio to be around 1.8 times this year, allowing for cash retention for expansion projects [6] - The company aims to increase its dividend rate by approximately 10% annually until it reaches a targeted coverage level of 1.6 times [6] Group 2: Business Operations and Stability - Plains All American Pipeline is a master limited partnership (MLP) focused on oil pipelines and related infrastructure, with 80% of earnings derived from stable sources [3] - Following the $3.8 billion sale of its Canadian natural gas liquids assets, the company anticipates that 85% of its earnings will come from stable sources, enhancing cash flow stability [3][4] - The company has recently acquired a 55% interest in the Epic Crude Oil Pipeline for $1.6 billion and the remaining 45% for $1.3 billion, maintaining a leverage ratio around the mid-point of its 3.5 times target range [4] Group 3: Market Position and Valuation - Plains All American Pipeline has a market capitalization of $12 billion, with a current stock price of $17.55 [5][6] - The stock has a 52-week range of $15.57 to $21.00, indicating some volatility but also potential for growth [6] - The company maintains a gross margin of 4.07%, reflecting its operational efficiency [6]