7.6%-Yielding South Bow Corp Stock Thumping the S&P 500

By John Whitefoot, BA | October 22, 2025

SOBO Stock Up 17% Year to Date

Oil prices have taken a big hit on concerns about a glut of crude and what a global trade war could do to demand. West Texas Intermediate (WTI) is trading near $57.00, the lowest level since February 2021, down roughly 19.6% from where it was a year ago.

With oil prices plunging to their lowest level in almost five years, some energy bulls might think it’s a good time to sit on the sidelines and wait for the markets to turn. But not all energy plays will feel the pain longer-term.

There is one energy stream that is immune to crude oil prices and where we are in the economic cycle: pipelines. Pipelines may not be as exciting as oil exploration, but they’re one of the best income investments out there.

They’re essentially the toll bridges of the oil patch, moving oil and gas from wellhead to refineries. Pipeline profits aren’t hurt by asset bubbles or stock market crashes. Volatile energy prices have almost no impact on earnings, because the company earns a fee for each barrel shipped, which results in reliable cash flow and dividends.

One great overlooked, or rather newly listed, oil and gas midstream pick is South Bow Corp (NYSE:SOBO).

South Bow Corp is an energy infrastructure company that owns and operates liquid pipelines and facilities that extend across Canada and the U.S. Its current footprint includes 3,045 miles of pipelines running from Northern Alberta to refining markets in the U.S. Midwest and on the Gulf Coast. (Source: “Corporate Presentation,” South Bow Corp, last accessed October 20, 2025.)

Every day, the company’s infrastructure delivers 1.25 million barrels of oil equivalent per day. South Bow also operates 7.6 million barrels of terminal storage capacity. It recently completed construction on a 150,000-barrel crude oil storage tank that is scheduled to be ready for service in early 2026. This is expected to result in increased cash flows throughout the second half of 2026 and into 2027.

Overall, South Bow’s high-quality contractual framework results in stable, predictable cash flows:

~90% of normal earnings before interest, taxes, depreciation, and amortization (EBITDA) are contracted with a weighted average remaining contract term of approximately eight years
~95% of consumers are refiners, vertically integrated companies, and producers
96% of revenue exposure is to investment-grade counterparts

A Second-Quarter Earnings Beat for South Bow Corp

For the second quarter ended June 30, South Bow reported revenue of $524.0 million and earnings of $96.0 million, or $0.46 per share. It reported normalized EBITDA of $250.0 million and distributable cash flow of $167.0 million. (Source: “South Bow Reports Second-Quarter 2025 Results And Declares Dividend,” South Bow Corp, August 6, 2025.)

It recorded average throughput of approximately 544,000 barrels per day (bbl/d) on its Keystone Pipeline, and approximately 760,000 bbl/d on the U.S. Gulf Coast segment of the Keystone Pipeline System.

Throughput on the Keystone Pipeline and U.S. Gulf segment of the Keystone Pipeline System averaged approximately 578,000 bbl/d and 744,000 bbl/d, respectively, in the first half of 2025.

Base Dividend of $2.00/Share

For the second quarter, South Bow Corp declared dividends totaling $104.0 million and $0.50 per share, for an annual forward dividend yield of 7.62%. Admittedly, the company only began paying a dividend at the start of 2025, so it doesn’t exactly have a rich history of making a reliable payout.

With that said, South Bow’s second-quarter distributable cash flow of $167.0 million is more than enough to cover its second-quarter payout. And its stable and predictable cash flows suggest that its dividend is safe.

SOBO Stock Up 17.5% in 2025

WTIC has taken a hit in 2025, but SOBO stock has not. Again, that’s due in large part to South Bow Corp’s reliable take or pay contracts, which help support its cash flow and earnings. That doesn’t mean knee-jerk investors won’t result in some near-term volatility, but, so far, SOBO stock has been outperforming the S&P 500 this year.

As of October 20, SOBO stock is trading hands at $26.09 per share, putting it up 17.5% year to date and 10% on an annual basis.

Chart courtesy of StockCharts.com

The Lowdown on South Bow Corp

I have no influence on the oil market and no idea where oil and gas prices are going. But I do know that South Bow Corp moves its customers’ liquids through its pipelines across three Canadian provinces and eight U.S. states. And it gets paid whether the drillers make money or not. This translates into reliable earnings and dividends.

Even though SOBO only began trading on the NYSE one year ago, Wall Street already sees its value, with 413 institutions holding 71.75% of all outstanding shares. Three of the biggest holders include Royal Bank of Canada, Capital International Investors, and Price T. Rowe Associates Inc. (Source: “South Bow Corporation (SOBO),” Yahoo! Finance, last accessed October 20, 2025.)