Keyera (TSX:KEY) is an integrated energy infrastructure company that gathers, processes, stores, and transports natural gas and natural gas liquids. It also provides high-quality, value-added services to customers across North America. The company has outperformed the broader equity markets this year, with returns of 47.3%. Falling interest rates and solid financials have boosted the company's stock price. It also pays a quarterly dividend of $0.52/share, translating into a forward dividend yield of 4.6%.

Let's assess its recent quarterly performance and growth prospects to determine whether investors could buy Keyera for its 4.6% dividend yield.

Keyera's third-quarter performance

Keyera reported an impressive third-quarter performance last month, with its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growing by 12.1% to $322.24 million. It generated $260.2 million of funds from operations, representing a 9.5% increase from the previous year. Growth across its three segments – Gathering and Processing, Liquids Infrastructure, and Marketing – boosted its operating margin by 49.9%.

The Gathering and Processing segment's operating margin grew 9% during the quarter due to capacity expansion at the Pipestone gas plant and the absence of $16 million in wildfire-related expenses, which the company incurred in the previous year's quarter.

The operating margin of the Liquids Infrastructure segment grew 9.8% due to higher storage contribution and contracted volumes at the Keyera Fort Saskatchewan complex.

The company's Marketing segment, which purchases and sells natural gas liquids, crude oil, and iso-octane, posted an operating margin of $190.8 million, representing a 175% increase from the previous quarter. Increased volume, higher realized price, and unrealized gains from risk management contracts boosted its operating margin.

Now, let's look at its growth prospects.

Keyera's growth prospects

In the Gathering and Processing segment, Keyera continues to operate its gas plants at full capacity, thus driving its throughput. With its North region gas plants connecting to the KAPS pipeline system, these facilities have a competitive advantage in providing integrated gas processing, natural gas liquids, and condensate services.

Moreover, the company continues strengthening its Liquids Infrastructure segment amid rising demand for fractionation services in Western Canada. It plans to add two fractionation units at the Fort Saskatchewan complex, increasing Keyera's net fractionation capacity to 155,000 barrels per day. Amid these growth initiatives, the company's management projects its adjusted EBITDA (keeping the Marketing segment constant) to grow at an annualized rate of 6–7% through 2025.

Keyera's financial position also looks healthy, with liquidity of $1.5 billion. At the end of the third quarter, its net debt-to-adjusted EBITDA stood at 1.9, well below its target of 2.5–3.

Dividend and valuation

With around 65% of its cash flows underpinned by fee-for-service and take-or-pay contracts, Keyera generates healthy cash flows, irrespective of broader market conditions. Supported by these stable cash flows, the company has raised its dividends at 6% CAGR (Compound annual growth rate) since 2008. Its payout ratio has been healthy at 53% in 2023. Given its low-risk contracted business, growth initiatives, and healthy financial position, I expect Keyera to continue its dividend growth in the coming years.

Moreover, Keyera's valuation looks attractive, with its NTM (next 12 months) price-to-sales and enterprise value-to-EBITDA multiples at 1.5 and 12, respectively. Considering its consistent dividend growth, healthy growth prospects, and cheaper valuation, I believe Keyera would be an excellent buy now.