Pembina Pipeline (NYSE:PBA) stands out among dividend stocks. Instead of paying its investors quarterly like most other stocks, it cuts them a check each month. Accordingly, it's an ideal stock for income-seeking investors.

The Canadian pipeline giant adds to its appeal by also boasting solid growth prospects. That was evident by the steps it took during the third quarter, and as a result, Pembina should have plenty of fuel to continue increasing its monthly payout in the coming years.

Drilling down into Pembina Pipeline's third-quarter results

Metric

Q3 2019

Q2 2018

Change

Adjusted EBITDA

$736 million

$732 million

0.5%

Adjusted cash flow from operating activities

$530 million

$523 million

1.3%

Adjusted cash flow per share

$1.04

$1.03

1%

Dividend payout ratio

58%

55%

5.5%

Data source: Pembina Pipelines. All figures in Canadian dollars. Current exchange rate 1 Canadian dollar = $0.76.

Pembina Pipeline's earnings and cash flow rose slightly during the third quarter. Because of that, the company's dividend payout ratio increased a bit as a result of a 5.3% increase earlier this year.

Driving the company forward were the solid results in its pipelines and facilities segments:

Pembina Pipeline's adjusted EBITDA by segment in the third quarter of 2019 and 2018.

Data source: Pembina Pipelines. Chart by author. All figures in Canadian dollars.

Earnings in Pembina's pipelines segment rose roughly 2% year over year even though volumes declined by about 1%. The company more than offset weaker volumes -- due in part to lower commodity prices -- by reducing its general and administrative expenses.

Facilities' earnings improved by about 8% year over year even though volumes also fell roughly 1%. Driving the earnings growth was higher revenue. Meanwhile, volumes decreased due to a third-party system outage, maintenance, and commodity price-related production declines.

Finally, earnings in the marketing and new ventures segment tumbled 15% even though volumes rose 10%; the main issue was lower propane and butane margins.

Stacks of coins with arrows rising

Image source: Getty Images.

A look at what's ahead for Pembina Pipeline

While Pembina Pipeline's earnings didn't grow very much during the third quarter, it made excellent progress in reaccelerating them. The highlight was an agreement to acquire Kinder Morgan Canada (TSX:KML) and the U.S. portion of the Cochin Pipeline from Kinder Morgan (NYSE:KMI). Pembina agreed to pay 4.35 billion Canadian dollars ($3.3 billion) for these assets, which will enhance its diversification and significantly grow its earnings. Because of that growth, Pembina plans to increase its dividend by another 5% following the closing of the transaction, which should occur in the first quarter of next year.

In addition to that transaction with Kinder Morgan, Pembina continued to move forward with new expansion projects during the quarter. It approved the first stage of another expansion of its Peace Pipeline system, Phase IX, to support continued drilling in the Montney shale in Canada. The roughly CA$100 million ($76 million) project should start service by the fourth quarter of 2021. That latest addition increased the company's pipelines and facilities backlog to CA$3.2 billion ($2.4 billion). The company is also working with a partner to build a new petrochemical complex in Canada. That CA$2.5 billion ($1.9 billion) project should start up by mid-2023. These projects should drive growth over the next few years, giving the company more fuel to increase its dividend.

Meanwhile, Pembina continues to make progress on the Jordan Cove LNG Project. That large-scale expansion could provide needle-moving growth if it eventually wins regulatory approval. It's also continuing to evaluate other growth opportunities within its pipelines and facilities segment. The company's ability to continue securing new projects will enhance its ability to keep increasing its monthly dividend.

A monthly dividend stock for the long haul

Pembina Pipeline continued to grow its earnings and cash flow during the third quarter, which allowed it to keep increasing its dividend. Meanwhile, it added even more fuel for future dividend growth by agreeing to acquire Kinder Morgan Canada and the Cochin Pipeline. Add that to its growing slate of expansion projects, and this pipeline company remains an excellent option for investors seeking a monthly income stream.