President Biden has signed his gargantuan $1 trillion infrastructure bill. How can you profit? asks Mark Skousen, editor of Forecasts & Strategies.
The best play is Brookfield Infrastructure Corp. (BIPC), with a 3.5% yield. BIPC was created in May 2020 as an alternative to the Brookfield Infrastructure Partners (BIP), a limited partnership that is subject to complex tax reporting. We will follow BIPC.
Based in Toronto, Brookfield Infrastructure Corp. is a subsidiary of its parent company Brookfield Asset Management (BAM), a giant asset-management firm that has been around since the 1980s and managed by CEO James B. Platt. I met him recently at the Baron Investment Conference and was impressed with his experience and knowledge of technology.
BIPC is a well-diversified investor in infrastructure assets, including electric utilities, data centers, fiber networks, oil & gas pipelines and telecom towers across North and South America, Asia Pacific and Europe.
The operations are sufficiently profitable to pay a solid and growing dividend, which is currently at $0.51 per share (3.5% yield). In the past year, Brookfield Infrastructure has had a strong year, with double-digit-percentage growth. Revenues rose 33% to $1.6 billion, and it has a growing profit margin of 6.5%.
As the global economy has reopened, Brookfield has taken advantage of it with new acquisitions, such as the Inter Pipeline in Western Canada. BIPC also has agreed to sell its remaining stake in its Chilean toll road operation for $160 million. Meanwhile, it’s working toward selling additional assets that could generate another $1 billion in capital over the next six to eight months.
It is using these funds to invest in “once in a lifetime” opportunities to replace aging data infrastructure and assist utilities and midstream assets with developing more sustainable operating models. For example, it is investing $500 million into the Australian regulated utility AusNet Services.
Action to take: Let’s add Brookfield Infrastructure Corp.to our Forecasts & Strategies portfolio.
