Plains All American Pipeline (PAA) pulled off a strategic pivot that has dividend investors asking one question: Can this 9% yielder keep raising payouts?

The Houston-based midstream giant operates crude oil pipelines, terminals, and storage facilities across the U.S. and Canada. 

And following recent deals worth billions, the company is betting big that becoming a pure-play crude operator will deliver more stable cash flows and stronger distribution growth.

Let’s dive deeper. 

Plains All American Pipeline is betting big on crude—Shutterstock—Dong Nhat Huy

Shutterstock-Dong Nhat Huy

Plains goes all-in on crude oil

Plains just completed two significant transactions that fundamentally change what the company looks like.

First, it acquired 100% ownership of the EPIC Crude pipeline system for roughly $1.3 billion, including about $500 million in debt. 

The deal closed in two parts: a 55% stake purchased from Diamondback and Kinetik, followed by the remaining 45% operating interest from an Ares private equity portfolio company.

Plains plans to rename the system Cactus III and integrate it with its existing Cactus long-haul infrastructure.

CEO Willie Chiang called the EPIC acquisitions “highly synergistic and very strategic,” projecting a mid-teens unlevered return. Management expects a 2026 adjusted EBITDA multiple of approximately 10x, which should improve meaningfully over the next few years.

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The flip side? Plains is selling its entire Canadian NGL business to Keyera for $5.15 billion. That deal is expected to close by the end of the first quarter of 2026, pending regulatory approvals.

Two of the three required approvals are already in hand—U.S. Hart-Scott-Rodino and the Canadian Transportation Act. The Canadian Competition Bureau approval process is still ongoing.

What EPIC brings to the table

The EPIC acquisition isn’t just about adding pipes to the portfolio. Plains now controls operatorship, which accelerates synergy capture across the entire system.

Near-term benefits include contractual step-ups, reduced operating costs and overhead, quality optimization opportunities, and better utilization of Plains’ existing Permian and Eagle Ford asset base.

Long-term, the system offers expansion capacity that could provide additional Gulf Coast access as demand grows.

Executive Vice President Jeremy Goebel highlighted that a substantial portion of EPIC’s contracts run long-term, with medium-duration agreements covering the balance. The pipeline operates at current market rates, positioning it for stable and growing cash flows.

According to CFO Al Swanson, the EPIC acquisition extends Plains’ weighted average contract duration from 2028 to October 2029.

Synergies could come fast

Management expects to capture synergies quickly, with many benefits hitting in 2026.

  • PAA cited cost structure savings, overhead reductions, and integration with existing systems as immediate opportunities. 
  • Operating the pipeline directly gives Plains control over partial expansions as market conditions dictate.
  • Goebel emphasized that much of the synergy capture is “contractual and immediate,” including step-ups in contracts and cost savings. 
  • Beyond that, Plains can optimize across its gathering, intrabasin, and long-haul systems.

PAA also highlighted quality optimization, capital avoidance through underutilized laterals, and increased flexibility for customers as additional value drivers.

The dividend question

So what does all this mean for the 9% dividend?

PAA ended 2025 with a quarterly dividend of $0.38 per share, up from $0.18 per share in 2021, according to data from Yahoo Finance. The energy player has more than doubled its dividend over the last four years. 

Since January 2021, PAA stock has returned 85% to shareholders. But if we adjust for dividend reinvestments, cumulative returns are closer to 170%, as per Ycharts. It means dividends have accounted for 50% of cumulative returns in this period. 

The dividend growth story for Plains All American Pipeline is far from over, given analysts forecast annual dividends to increase to $1.88 per share in 2028, making it attractive for income-seeking investors. 

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Swanson noted the company would “look through noise” when evaluating distribution increases, focusing on run-rate DCF (distributable cash flow) rather than temporary timing issues related to the asset sales.

The NGL divestiture should close in Q1, with proceeds largely redeployed through the EPIC acquisition. Management expects the trade to be “substantially DCF accretive over time.”

Due to timing differences between closing dates, Plains’ leverage ratio will temporarily exceed its 3.5x target range. But once the NGL sale finalizes, leverage should trend toward the midpoint.

After reaching target coverage, Plains will shift to a DCF growth-based distribution model. The embedded growth in EPIC, combined with multiple compressions from 10x to mid-teens unlevered returns, provides meaningful runway.

Challenges remain for the dividend stock

Plains faces near-term headwinds that could pressure cash flows.

Certain Permian long-haul contract rates reset to market in September, with the full impact hitting in the fourth quarter. Management called this quarter the new baseline for lower contract rates out of the Permian.

Swanson emphasized:

On volumes, the outlook for 2026 remains murky. Chiang acknowledged that predicting next year’s Permian growth is “really tough,” citing mixed signals from producers.

While two major operators continue to grow steadily, others have taken a “stoplight approach.” Plains won’t provide detailed 2026 guidance until February.

Long-term tailwinds look strong

Despite near-term uncertainty, Plains remains bullish on North American crude fundamentals.

Management pointed to continued global energy demand growth, underinvestment in organic oil supply, and diminishing OPEC+ spare capacity as structural tailwinds.

Chiang highlighted that organic reserve replacement has fallen below 100%, creating long-term support for North American production.

Plains also sees opportunities beyond the Permian, including potential Canadian crude egress projects. The company’s Capline pipeline from Patoka to the Gulf Coast has significant spare capacity that could help move additional Canadian barrels to export markets.

The verdict, final takeaway

Plains All American appears positioned to continue raising distributions through 2026 and beyond.

The EPIC acquisition adds immediate cash flow with contractual step-ups, while the NGL sale eliminates a more volatile business segment. Management’s track record of meeting distribution targets provides additional confidence.

However, investors should watch for 2026 guidance in February. Permian volume growth and crude price realization will determine whether Plains can deliver on its mid-teens EPIC return projections while maintaining distribution growth.

For now, the 9% yield looks sustainable—with room to grow.

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