Pacific Link and LNG Canada: Which TSX Energy Stocks Analysts Expect to Benefit

Canada's first large shipments of liquefied natural gas left Kitimat, B.C., in the summer of 2025. That date matters to investors because it changed Canadian energy from a plan into a working export business, and it is the reason analysts are now paying attention to who earns money as that business grows.

LNG Canada's first phase was built to export 14 million tonnes per annum, the industry's way of measuring yearly output. The project cost about $40 billion on 2024 estimates. With that phase running, an expansion to roughly double capacity has been green-lit. Separately, a proposed oil pipeline to the Pacific coast, often called Pacific Link, is being fast-tracked. Together they point to the same shift: more Canadian oil and gas heading west to Asian buyers instead of south to the United States.

Why the direction of the pipe matters

For decades, Canada sold most of its oil and gas to one customer. When you have one buyer, you take their price. Canadian heavy oil has long traded at a discount to U.S. benchmarks, known as the Western Canadian Select differential, partly because there was nowhere else to send it.

A pipeline to the coast gives producers a second door. Even if most barrels and gas still go south, having another buyer tends to narrow that discount. That gap is the money analysts are trying to follow.

Two kinds of companies that stand to gain

The first group is the pipeline and processing companies, often called midstream. Many of them run what is usually described as a toll-booth model. They charge for each unit moved through their systems under long-term contracts, so their revenue depends more on volume than on the daily price of gas. More export capacity means more volume moving through the same network.

Pembina Pipeline is a clear example. It partners with the Haisla Nation on Cedar LNG near Kitimat, which reached a final investment decision in mid-2024 at an estimated cost of about US$4.0 billion. The Haisla hold the majority stake, making it the first LNG facility in the world with majority Indigenous ownership. That structure lowers the risk of the project stalling over consent, a problem that has delayed other Canadian projects. Coastal GasLink, which carries gas from northeastern B.C. to the coast, reached mechanical completion in late 2023 and is the physical link that makes all of this possible.

The second group gets less attention. Gas producers in the Montney and Duvernay formations, across northwestern Alberta and northeastern B.C., gain when there is more room in the pipes to move what they pump. They do not own the terminals, but they benefit when their gas can reach a better market.

What this means for a dividend investor

For many higher-income Canadians, the appeal here is the dividend more than the share price. Leaders like Enbridge and Pembina guided in 2025 toward yearly dividend growth in the range of 5% to 7%. In a non-registered account, dividends from Canadian companies also qualify for the dividend tax credit, federally and in Manitoba, which can make them more tax-efficient than interest income at the same pre-tax yield.

Some pipeline contracts also include toll increases linked to inflation. That can help protect purchasing power over time, but how much depends on each company's contracts, so it is worth checking before you assume it.

The risks are real

Large Canadian energy projects have a history of going far over budget. Trans Mountain and Coastal GasLink are the obvious examples, and overruns can weigh on the companies involved for years.

These stocks also behave a bit like bonds. When interest rates stay higher than expected, high-dividend shares often fall in price even if the business is doing well. The Bank of Canada targets 2% inflation within a 1% to 3% band, and its rate decisions affect how investors value these steady payers.

Supply is the third risk. Qatar and the United States are adding large amounts of LNG capacity, and several analysts see a possible global surplus later this decade. Canada's shorter route to Asia and its access to hydroelectric power for liquefaction help, but they do not guarantee strong prices.

Energy already makes up roughly 12% of the S&P/TSX Composite, based on the 2024 to 2025 average. If you own a Canadian index fund, you likely hold some of these companies already. The more useful question is whether adding more fits the share of your portfolio you are comfortable having tied to a single sector.