This High-Yielding Dividend Stock Is Near Its 52-Week Low

If you’re looking for a good dividend stock to buy, you may want to focus on one that hasn’t been doing all that well of late, but which may still be a stable option nonetheless.

Oil and gas company Pembina Pipeline (TSX:PPL)(NYSE:PBA) is an intriguing option as it is down around 5% this year and is trading near its 52-week low of $48.35. As oil prices have been declining, investors have become more bearish on these types of stocks. But Pembina may not be a bad option, particularly for dividend investors.

Currently, the stock’s dividend yields 5.6%, which is far higher than the S&P 500 average of around 1.2%. And while the dividend is high, it doesn’t look all that risky. Over the trailing 12 months, the company has generated free cash flow totaling $2.7 billion, while its cash dividend payments have totaled only $1.7 billion over that timeframe.

In May, the company also increased its quarterly dividend by 3%, in a sign of confidence in its ability to continue to do well despite challenging macroeconomic conditions. Through the first three months of the year, the company’s earnings totaled $502 million, which was higher than the $438 million profit that Pembina reported in the same period a year ago.

While investors may be bearish on oil and gas stocks, now may be a good time to add a quality investment such as Pembina to your portfolio. It’s a bit of an underrated buy as it pays a high dividend and it’s trading at a modest valuation – just 16 times its trailing earnings.