By 2025, countries will be spending an estimated $9 trillion a year on infrastructure. We’re talking about toll roads, utilities, telecommunication lines, ports – all things that modernization requires.
It’s an opportunity that will always be there. After all, what does a government do whenever it needs to “revitalize” an economy? You got it – spend tens of billions of dollars on infrastructure. It’s a form of Keynesian economics that’s always popular with the masses.
Today’s stock of the day is a company known for spitting out consistently healthy cash flows back to its investors. What makes it possible? Its ownership of these exact infrastructure assets around the world. On top of that, it’s also currently trading at what some are calling “bargain basement” prices.
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Brookfield Infrastructure Partners (BIP / BIPC)
Brookfield Infrastructure is a spinoff from Brookfield Asset Management, an alternative asset management company with over $800 billion in assets under management. The asset manager still retains a 30% equity stake and acts as the partnership’s general manager. This enduring connection is an asset for BIP, giving it opportunities through a larger network.
BIP is a pure-play for investors looking to get cash flows from the growing yet stable global infrastructure market. They operate a globally diversified portfolio of infrastructure businesses spanning transport, utilities, data centers, and freight.
Their focus when investing in these assets? Stable cash flows, high margins and strong growth prospects. 90% of its operational cash flows comes from long-term contracts or government-regulated frameworks. And that’s what makes the company so attractive.
Its current dividend yield stands at a healthy 4.5%. But what’s important is that the company plans to grow its dividend distribution at about 5–9% every year – and has been since it went public in 2008.
The latest operating results also show very healthy cash flow growth with additional growth catalysts on the horizon – such as the completion of its Heartland Petrochemical Complex.
But this hasn’t appeared to be fully reflected in its price – meaning now may be a good time to take a stake in this company and enjoy the dividend flows.
To your wealth,
Felix @ Ace of Investing