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The Keystone XL project was TC Energy’s largest project under development prior to its cancellation.Alex Panetta/The Canadian Press

For all the handwringing over the cancellation of the Keystone XL project and what the loss of the pipeline extension means for Canada’s energy exports to the United States, spare a thought for investors who have stuck with TC Energy Corp. this year.

Oh wait – these investors are up nearly 26 per cent in 2021, trouncing the benchmark. And the return doesn’t include the hefty dividend that currently yields 5.4 per cent annually.

Perhaps the takeaway here is that TC Energy can fare just fine without Keystone, and it’s best to tune out most regulatory hurdles and political noise.

The Calgary-based company proposed Keystone XL 13 years ago. It would give Alberta oil a direct route to refineries on the U.S. Gulf Coast and potentially remove the discount that often weighs on the price of the heavy crude, known as Western Canadian Select.

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Does Canada need another pipeline? That’s the question federal officials were asking after Keystone XL cancellation

The project actually died in January, when U.S. President Joe Biden revoked the presidential permit that would have allowed the pipeline to cross the U.S. border.

TC Energy’s announcement on Wednesday that it had cancelled the project was really just a formal declaration that observers knew was coming – analysts adjusted their targets for the stock price back in January – which was why the share price barely moved on the news.

To be sure, the termination of the Keystone expansion is not good news for investors.

In its first-quarter financial results, released in May, TC Energy reported a $1.1-billion loss, owing to a $2.2-billion after-tax impairment charge related to the cancellation of the project.

Also, consider the loss of what could have been an attractive stream of profits.

The expansion was TC Energy’s largest project under development prior to its cancellation. Its completion would have doubled the capacity of the existing Keystone Pipeline System, which generated more than $1.6-billion in EBITDA (earnings before interest, taxes, depreciation and amortization) in 2019, the last full year before the pandemic disrupted energy markets. That’s nearly 18 per cent of the company’s total EBITDA that year.

But with TC Energy’s share price up dramatically this year, investors are not bothered by the loss of the expansion project. The reasoning here: The company can do fine without it.

Beyond oil pipelines, TC Energy has two other major operations. It owns natural gas pipelines in Canada, the United States and Mexico. And its power and storage division includes natural gas storage facilities, gas-fired power plants and a stake in Bruce Power, the Ontario nuclear generator that produces 30 per cent of the province’s power.

About 95 per cent of the company’s cash flow comes from regulated assets or long-term contracts, providing a level of predictability that can be attractive when the economy is turbulent.

What’s more, TC Energy has a broad slate of development projects that can underpin the company’s growth ambitions. It plans to spend between $5-billion and $6-billion annually, which doesn’t include takeovers.

For example, the company can extend natural gas pipelines to coal-fired plants that are converting to gas, and add renewable power assets to meet the electricity needs of its U.S. pipelines. These investments could improve the company’s ESG profile (environmental, social, governance), potentially giving the stock’s valuation a boost.

Lastly, TC Energy’s dividend growth – a big reason to own the stock – is not tied to the Keystone XL expansion. The company raised its quarterly payout by 7.4 per cent this year when the project was all but officially dead, implying confidence in future cash flows. It plans to increase the payout by 5 per cent to 7 per cent annually after this year.

Without Keystone XL, TC Energy will be okay.

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