Image Source: Kinder Morgan

Pipeline companies like TransCanada (NYSE:TRP) are appealing to investors for a number of reasons, not the least of which is their ability to deliver strong and steady dividend payouts. That said, while investors do like stable payouts, they'd prefer that income to increase over time. That's a potential problem for TransCanada because the company is having real trouble getting its expansion projects off the ground, which really clouds its future making it tough to confidently buy this stock right now.

Growth stopped in every direction
TransCanada thought it had its next phase of growth locked up in 2008 when it filed its application to build the Keystone XL pipeline. However, after seven years of review the $8 billion pipeline project was rejected by the Obama administration late last year. It was a really big setback for the company and Canada's oil sands industry because it lacks the pipeline capacity to get its oil to market. 

Knowing that building an export pipeline through the U.S. was becoming a political problem the company turned its attention toward building a pipeline through its own country in hopes of avoiding a similar situation. In 2013 it announced its intention to build the $12 billion Energy East Pipeline, which would move oil from western Canada to refineries and a marine terminal in the eastern part of the country. However, that project has also come under pressure from communities, governments, and environmentalists that are opposed to its route. Like the Keystone XL project, it's a pipeline that might never be built. 

Turning to the west for growth also isn't really a viable option given the problems that peers Kinder Morgan (NYSE:KMI) and Enbridge (NYSE:ENB) are having with their own westward oil sands projects. Kinder Morgan's Trans Mountain expansion project was thought to be a slam dunk for approval because the bulk of that pipeline's route would follow the same path of its existing pipeline. Unfortunately, it's where the two project paths deviate that has been the stumbling block, causing significant delays. Meanwhile, Enbridge has faced fierce opposition from environmental groups and First Nations that don't want to see its Northern Gateway project built. Because of this opposition it's a growing possibility that neither Kinder Morgan nor Enbridge will build their projects. On top of that TransCanada's own natural gas pipelines to serve British Columbia's proposed LNG industry have come under pressure due to weaker commodity prices and environmental concerns. Needless to say, there's not much hope of growing out west. 

Turning to M&A to ease the organic pain
With dwindling options to organically grow its pipeline network in its own country, TransCanada is reportedly turning its attention to its neighbor to the south to buy growth instead of build it. In doing so, the company is said to have held talks with U.S. pipeline company Columbia Pipeline Group (NYSE: CPGX) about a merger.

It's a deal that would potentially give TransCanada a position in the core of the Marcellus shale play, which it could then connect with its existing system. More importantly, Columbia Pipeline has $8 billion in commercially secured growth projects, that would bolster TransCanada's own organic growth visibility going forward. That being said, according to reports the talks between Columbia Pipeline and TransCanada have hit a standstill and at the moment the deal looks dead, which clouds the company's growth picture even further.

Investor takeaway
Though not for lack of trying, TransCanada has really struggled to get growth projects off the ground in recent years. It seems like every direction the company takes to grow its pipeline business has hit a road block that at the moment looks impassable. Because of the company's growing problems with visible growth, now is not the best time to buy the Canadian pipeline company. There are just too many other pipeline companies that have their growth all locked up, making them better buys instead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.