AltaGas (TSX: ALA) and Pembina Pipeline (TSX: PPL) are two of Canada’s largest diversified energy infrastructure stocks. While these stocks share some similarities, they also have differences that make each a unique investment opportunity. Here’s why both are good choices if you like stability, growth, and income.
AltaGas: A reliable growth stock
AltaGas operates two businesses. The first is a regulated natural gas utility business that spans across the northeastern United States.
It has grown by a 9% compounded annual growth rate (CAGR), which is an above-average rate. The company is aiming for an 8% growth rate going forward. The utility makes up over 50% of AltaGas’s income.
The company has built an enviable midstream network in Western Canada that collects, processes/fractionates, transports, and exports liquefied petroleum gases (LPG) around the world.
Conflicts in the Middle East are pinching the LPG supply for markets in Europe and Asia. AltaGas has seen both volume and pricing increase for its LPG from Asian markets. With a new export terminal set for completion in 2027, it will be able to better meet that demand.
Currently, 86% of AltaGas’s income is contracted or regulated. It is aiming for 90% in the next few years. This just means more certainty for shareholders in the coming years.
In its recent quarter, AltaGas raised its earnings per share guidance by 6% for 2026. With nearly $1 billion of midstream projects set to come online by the end of 2027, AltaGas should see a significant cash flow boost as it starts generating income.
AltaGas stock yields 2.5% right now. It has grown its dividend by a 6% CAGR over the past six years. It aims for 5-7% annual dividend growth going forward.
Pembina Pipeline: Resilient income and growth
Pembina Pipeline is more focused on Western Canada. It provides all the infrastructure that energy companies need to get their production to market. It offers collection and egress pipelines, storage, midstream/processing facilities, fractionation, and export terminals.
While it is not regulated (which tends to be safer), like parts of AltaGas, over 85% of its income is contracted to quality counterparties. While it has some commodity exposure, it is not necessarily a bad thing. When energy prices are elevated (like they are today), it enjoys a surge of cash flow to the bottom line.
Pembina has some exciting catalysts for growth ahead. It has the Cedar LNG project (one of only a couple of Canadian LNG export terminals in construction) that will be generating income in 2028. It just came to an agreement to power a major data centre complex in Alberta. That is on top of an ethane extraction facility and several nearer-term pipeline expansions.
Pembina is aiming to grow fee-based earnings by a 5-7% CAGR all the way to 2030. With an attractive balance sheet, it is not putting itself at risk with its progressive growth plans.
This stock has increased its dividend every year since 2022 (after a couple-year dividend-growth pause). It may not be growing quite as quickly as AltaGas, but you get a bigger dividend yield of 4.2%.