Brookfield Infrastructure: An MLP for Reliable Income

10/30/2020 5:00 am EST

Focus: GLOBAL

Tom Hutchinson

Editor, Cabot Dividend Investor

Bermuda-based Brookfield Infrastructure Partners (BIP) owns and operates infrastructure assets all over the world, notes Tom Hutchinson, editor of Cabot Dividend Investor.

The master limited partnership focuses on high quality, long-life properties that generate stable cash flows, have low maintenance expenses and are virtual monopolies with high barriers to entry.

Brookfield operates a current portfolio of over 1,000 properties in 30 countries on five continents. It's a assets include toll roads in South America; telecom towers in France; railroads in Australia and North America; utilities in Brazil; natural gas pipelines in North America; ports in Europe, Australia and North America; and data centers on five continents.

These are some of the most reliable revenue generating assets in the world. But it’s even better than it may seem. In addition to dependable revenue, of which over 90% is regulated or contracted, there’s solid growth.

The beauty of this company is that these assets earn reliable income in any economy, even the pandemic economy that has thrust the world into one of the most severe economic downturns ever.

First of all, BIP yields a stellar 4.2%. And secondly, the company is extraordinarily resilient in any economy. In the first half of 2020, Brookfield’s earnings were down just 4% compared to the same period last year. The company also forecasts year-over-year earnings growth for the full year.

It’s a great stock to own through the turmoil and uncertainty. But, on the other side of the election and the pandemic, the stock should be even better. It has been able to make great acquisitions on the cheap during the recession that will boost earnings in the quarters and years ahead. And the environment is providing a huge tailwind.

Since its IPO in 2008, BIP has returned over 600% (with dividends reinvested). That’s about three times the return of the overall market during the same period. And there is good reason to believe the future will be even better than the past.

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