High-Yield Dividend Stock Projected to Potentially Double Its Distribution in an 8-Year Span
Brookfield Infrastructure, a subsidiary of Brookfield Asset Management, continues to attract investors with its robust performance and strategic asset acquisitions. Over the past 12 months, Brookfield Asset Management raised an impressive $97 billion in capital, providing Brookfield Infrastructure with opportunities to expand its portfolio.
One of Brookfield Infrastructure's recent acquisitions involves the purchase of 5,500 miles of pipelines capable of transporting 2.5 million barrels of refined products per day. The pipeline acquisition is expected to repay its principal investment in about seven years.
The company's second-quarter Funds From Operations (FFO) rose by 9% year over year when adjusted for foreign exchange rates, demonstrating the reliability of demand for its assets such as pipelines, fiber optic cables, and shipping containers.
Brookfield Infrastructure's strong earnings in the second quarter of the previous year surpassed its expectations for long-term growth rates, although specific figures for the profits and how they surpassed those expectations are not provided in the available search results.
Funds from Operations (FFO) is the preferred metric for evaluating Brookfield Infrastructure's cash flows. The company targets a payout ratio between 60% and 70% of Funds From Operations (FFO), and the latest dividend payment was at 68% of FFO generated during the quarter. This translates to a 4.3% yield for investors.
For most investors, adding shares of Brookfield Infrastructure to a diverse portfolio now and holding them indefinitely looks like the right move. The company's business involves utility, energy, transport, and data-related assets, all of which are essential for modern economies.
Brookfield Infrastructure has access to around 2,500 investment professionals from Brookfield Asset Management, ensuring a robust analysis of potential acquisitions and investments. The company's investment-grade credit ratings from major rating agencies further bolster investor confidence.
Moreover, Brookfield Infrastructure has a proven track record of dividend growth. It has increased its dividend payout by 8% annually over the past 12 years. While continued growth at the top end of management's expected range of 5% to 9% isn't guaranteed, it isn't entirely unreasonable given the company's strong performance and strategic acquisitions.
Recent asset sales by Brookfield Infrastructure have yielded impressive returns, with a 19% internal rate of return on one such sale. With about 85% of Brookfield Infrastructure's cash flows coming from regulated utility businesses and long-term contracts, the company offers a stable and reliable income stream for investors.
In conclusion, Brookfield Infrastructure's strong performance, strategic asset acquisitions, and reliable income stream make it an attractive investment option for those looking to add utility, energy, transport, and data-related assets to their portfolios.
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