Energy midstream stocks appeal to investors with attractive yields and steady dividend growth. These days, with the focus on providing energy for data centers and AI, midstream companies with natural gas assets get the attention. Plains All American Pipeline LP (PAA) provides midstream services focused on crude oil, meaning it’s not on the radars of many investors.

Plains’s asset footprint extends from Canada to the U.S. Gulf Coast. The company owns 20,000 miles of pipeline and 157 million barrels of storage capacity.

Plains All American transports eight million barrels of crude oil and NGLs per day. Crude oil accounts for 85% of the company’s EBITDA. The balance is from NGLs, predominantly in Canada. About half of the company’s EBITDA is generated in the Permian Basin. Output from the Permian is expected to grow by 200,000 to 300,000 per day. Production was at 6.4 million barrels per day at the end of 2024.

As the major midstream operator in the Permian, production growth there will allow Plains to continue growing revenues and profits.

In November 2022, the company announced it will increase its dividend by 15% per year until the cash flow coverage reaches 160% of the dividends paid. Coverage currently sits at 19%, which means there will be at least a couple more years of double-digit dividend growth. A 12% payout increase should be announced in early January.

A recent article from ETF Trends noted: “Plains is unique in the midstream space due to its dual tickers. PAA is an MLP that issues a K-1, while PAGP is structured as an ‘Up-C’ and provides a 1099. However, PAGP is expected to provide return-of-capital or tax-deferred dividends for the next five years.”

PAA shares and PAGP shares pay the same dividend. That said, investors do not like getting a K-1, so PAGP currently yields 6.95%, while PAA pays 7.50%.