Pembina Pipeline's Preferred PPL.PF.A: A Steady 6.23% Yield in a Volatile Market—Buy Now?

In a world where income investments are as scarce as common sense in a bear market, Pembina Pipeline's preferred shares (PPL.PF.A) have just thrown investors a lifeline. The company's recent declaration of a CAD 0.4078 quarterly dividend, paired with a current yield of 6.23%, makes this a screaming buy for income hunters. Let's dig into why this fixed-rate gem could be your next high-yield, low-risk winner—and why you shouldn't wait.

The Dividend Machine Keeps Chugging

Pembina's PPL.PF.A (Series 21) isn't just a dividend-paying stock—it's a cash-cow on rails. The recent CAD 0.4078 payout, which will hit investor accounts on September 1, 2025, marks the latest in a string of reliable distributions. With an annual dividend rate of 6.302%, this preferred share has delivered rock-solid income since its issuance, backed by Pembina's ironclad cash flows from North America's energy infrastructure.

But here's the kicker: this dividend is cumulative. That means Pembina can't skip payments without owing investors later—critical in a market where too many companies treat dividends like optional extras.

Yield vs. Risk: Why 6.23% Feels Like 10%

At its current market price of $25.29 (as of July 4, 2025), PPL.PF.A's yield isn't just high—it's a steal compared to its peers. Let's crunch the numbers:

• Annual Dividend: $1.5755 (4 x $0.4078).
• Yield: $1.5755 / $25.29 ≈ 6.23%.

Now, compare that to other energy preferreds. For example, Enbridge's ENB.PR.A yields around 5.8%, while TransCanada's TRP.PR.A is stuck at 5.5%. PPL.PF.A's +0.4% to +0.7% edge is significant when every basis point counts.

The 2028 Redemption: A Clockwork Opportunity

Investors who hold PPL.PF.A until March 1, 2028, will face a golden crossroads. Pembina can either redeem the shares at par ($25) or reset the dividend rate. Here's why that's a win-win:

1. Before 2028: You lock in a 6.302% yield with minimal interest rate risk.
2. After 2028: If rates rise, the reset could boost your payouts. If rates fall, you'll still have the option to cash out at par—avoiding losses in a declining rate environment.

This five-year fixed-rate window is a rare luxury in a market where preferreds often reset every three years. Pembina's patience pays off for investors.

Why the “Low Risk” Label Sticks

Preferred shares aren't CDs, but PPL.PF.A comes close to “safe” status:
- Credit Strength: Pembina's pipelines are the backbone of North American energy transport, generating stable cash flows even in downturns.
- Market Resilience: The stock's 52-week trading range ($22.32–$25.44) shows limited volatility—critical for income investors who hate watching their principal evaporate.
- Seniority: Preferreds rank above common shares in liquidation. If the unthinkable happens, you're in line before the common stock crowd.

The Elephant in the Room: Rate Hikes

Critics will argue that rising interest rates could hurt preferred shares. But here's the truth: Pembina's fixed-rate period ends in 2028, meaning it's shielded from rate hikes until then. Compare that to a bond fund, which could lose 10% in value if rates spike.

In this environment, PPL.PF.A's 6.23% yield isn't just high—it's a hedge against inflation.

The Bottom Line: Buy Now—But Know the Exit

Action Alert! This is a buy for income investors who can hold until 2028. Here's the plan:
1. Buy now: Capture the 6.23% yield before rates rise further.
2. Hold: Let the dividends compound.
3. Sell or Hold in 2028: If Pembina redeems at par, cash out and reinvest. If they reset the rate, keep it only if the new yield meets your targets.

Final Word

Pembina's PPL.PF.A isn't a get-rich-quick scheme—it's a get-rich-steady play. With a fortress balance sheet, a dividend machine, and a 2028 reset that offers flexibility, this preferred share is a rare bird in today's yield desert.

Don't let this one fly away.

DISCLAIMER: Consult your financial advisor before making investment decisions. Past performance does not guarantee future results.