Plains All American Pipeline: 9%-Yielder Up 12% Since October
December 17, 2025
Bullish Tailwinds Propel Plains All American Units
West Texas Intermediate crude is down below $60,00 per barrel, trading at its lowest level in years. While this may be a bearish trend for most energy bulls, there is one industry that isn’t all that concerned about the price of crude. And that’s the oil and gas midstream sector, limited partnerships (LPs) in particular.
As midstream companies, energy LPs manage the storage and transportation of oil or natural gas. They don’t need to worry about the price of crude oil, because they don’t need to drill new wells.
They’re essentially the toll bridges of the oil patch, moving oil and gas from the 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, this results in reliable cash flow and dividends. On top of that, energy LPs don’t have to pay corporate taxes as long as they earn at least 90% of their income from activities involving the transportation of commodities in the U.S. This extra money allows them to pay some of the best dividends on Wall Street.
One great energy midstream LP that provides unitholders with long-term growth is Houston-based Plains All American Pipeline LP (NASDAQ:PAA). The limited partnership has been reporting reliable revenue growth and generating high profits. It also churns out positive free cash flow (FCF), which allows it to pay out robust distributions.
Plains GP Holdings LP (NASDAQ:PAGP) acts as the general partner, responsible for managing the day-to-day operations of the partnership.
About Plains All American Pipeline LP
Plains All American Pipeline operates a network of pipelines that transports crude oil, natural gas liquids (NGLs), and natural gas across the U.S. and Canada. Consequently, these all provide stable, fee-based revenues to the master limited partnership (MLP) in a volatile energy industry. (Source: “What We Do,” Plains All American Pipeline LP, last accessed December 10, 2025.)
On average, the mid-cap midstream energy play carries more than seven million barrels per day of crude oil and NGLs.
Its infrastructure includes approximately:
- 20,000 miles of active crude oil and NGL pipelines and gather systems
- 170 million barrels of storage capacity
- 2,300 trucks and trailers
- 5,400 crude oil and NGL railcars
Plains All American is always looking for ways to increase its industry position in an effort to become the premier crude oil midstream provider. (Source: “Fourth-Quarter 2025 Investor Presentation,” Plains All American Pipeline LP, last accessed December 10, 2025.)
In early September, the company announced that it was acquiring a 55% non-operated interest in EPIC Crude Holdings, LP for approximately $1.57 billion. The transaction is expected to be immediately accretive to distributable cash flow. (Source: “Plains to Acquire 55% Interest in EPIC Crude Holdings, LP,” Plains All American Pipeline LP, September 21, 2025.)
The remaining 45% interest in EPIC is owned by a portfolio company of Ares Management Corporation.
The EPIC Pipeline provides long-haul crude oil takeaway from the Permian and Eagle Ford basins to the Gulf Coast market at Corpus Christi.
The assets include:
- Approximately 800 miles of long-haul pipelines, including the EPIC Pipeline
- Operating capacity of over 600,000 barrels per day
- Approximately seven million barrels of operational storage
- Over 200,000 barrels per day of export capacity
Back in June, Plains All American Pipeline LP announced a definitive agreement for the $3.75-billion sale of its Canadian NGL business to Keyera Corp (TSX:KEY). (Source: “Plains All American Executes Definitive Agreements for $3.75 Billion Sale of NGL Business to Keyera,” Plains All American Pipeline LP, June 17, 2025.)
The transaction is expected to close in the first quarter of 2026 and result in Plains All American becoming a premier pure-play crude oil company. The sale is also expected to result in more durable cash flow and enhance its FCF profile.
Solid Q3 Results
Plains All American has continued to have a solid year, although third-quarter revenue slipped slightly to $11.57 billion. Net income, meanwhile, doubled to $441.0 million, or $0.55 per share. (Source: “Plains All American Reports Third-Quarter 2025 Results and Announces Closing of Acquisitions Totaling 100% Equity Interest in EPIC,” Plains All American Pipeline LP, November 5, 2025.)
The partnership’s net cash provided by operative activities advanced 18% to $817.0 million. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were flat at $806.0 million. Adjusted FCF came in at $303.0 million.
Over the last number of months Plains All American has completed the previously announced acquisition of a 55% equity interest in EPIC Crude Holdings. It has also wrapped up the acquisition (effective November 1) of the remaining 45% operated equity interest in EPIC, from Ares Private Equity, for a purchase price of approximately $1.33 billion. This transaction results in the LP owning a 100% equity interest in EPIC. EPIC will be renamed Cactus III.
Commenting on the third-quarter results and recent developments, Willie Chiang, the company’s chairman, chief executive officer, and president, said, “We have made significant progress in our journey of becoming the premier crude oil midstream provider. The pending divestiture of our NGL business, acquisition of EPIC, and streamlining efforts across the broader organization will provide tailwinds for the business despite near term macro volatility.”
Quarterly Distribution of $0.38/Unit
Thanks to reliable FCF, Plains All American Pipeline has a history of raising its quarterly payout—five years and counting. The LP paid a quarterly distribution of $0.18 per unit in 2020, rising to $0.2175 in 2022, $0.2675 in 2023, $0.3175 in 2024 and $0.38 in 2025. This works out to an annual distribution of $1.52 per unit for a forward distribution rate of approximately nine percent.
Commenting on PAA stock’s dividend payout, Chiang said, “We remain committed to our capital allocation framework and returning cash to unitholders. Our approximately 9.5% distribution yield is well supported with distribution coverage and offers an attractive opportunity to participate in energy markets where we expect improving oil market fundamentals.”
And indeed, Plains All American provides shareholders with a sector-leading, multi-year sustainably growing distribution.
PAA’s distribution yield of nine percent significantly outpaces multiple S&P 500 sectors: real estate, which has a yield of 3.4%, energy (3.3%), consumer staples (2.8%), materials (2.0%), health care (1.7%), financials (1.4%), consumer discretionary (0.8%), and technology (0.5%).
30%+ Upside with Plains All American Units?
Over the long run, Plains All American provides investors with solid capital appreciation. Over the last five years, PAA units have advanced 160%, far outpacing the S&P 500, which is up 87% over the same time period.
That doesn’t mean that there won’t be bumps along the way. As you can see in the chart below PAA units, along with the broader market, took a massive hit in early April after President Donald Trump unveiled his global tariffs.
Just before the announcement, PAA units hit a fresh 52-week high of $19.46 per share. It’s been a bumpy road since then. Though PAA units still continue to do well, trading up:
- 5.0% over the last month
- 12% since October
- 11.5% year to date
- 8.0% on an annual basis
The outlook for PAA units remains robust, with Wall Street analysts providing a 12-month share price target range of $20.40 to $23.00. This points to potential upside of approximately 17% to 32%.
Should PAA hit that high estimate of $23.00, it would be trading at its highest levels since 2015.
Chart courtesy of StockCharts.com
The Lowdown on Plains All American Pipeline LP
Plains All American Pipeline LP continues to be a great midstream energy play. It has been reporting strong results, its units are outpacing the broader energy sector, and it provides a reliably growing distribution.
The LP also recently announced a major strategic acquisition and blockbuster divesture, two moves that strengthen its balance sheets, streamline operations, and provide tailwinds, despite near-term macro volatility.
The outlook remains solid for Plains All American in 2025, with the partnership well-positioned to generate strong free cash flow and increase returns to unitholders.
