Brookfield Buys: Value & Yield


Tim Plaehn Image Tim Plaehn Investment Research Analyst, Investors Alley

For yield and value, we like two limited partnerships that are under the umbrella of Brookfield Asset Management (BAM), a Canadian alternative asset manager with over $250 billion under management, explains Tim Plaehn, editor of The Dividend Hunter.

Since 1899, Brookfield has focused on alternative assets including real estate, alternative energy and infrastructure. It is known as a value manager with a contrarian point of view.

Its CEO, Bruce Flatt, is often called the “Warren Buffett of Canada”. It has a history on increasing dividends, but the yield is small at only 1.55%. The much better yields are with its subsidiaries.

The first of these is Brookfield Infrastructure Partners L.P. (BIP). It is involved in four sectors: utilities, transportation, energy and communications infrastructure. Its assets are spread throughout the world including the United States, Canada, Australia, India, Europe and South America.

BIP has 10,000 kilometers of rail and 3,600 kilometers of highways around the world, has natural gas pipelines and storage facilities across North America, and over 10,500 kilometers of electrical lines in the Americas.

All of BIP’s businesses are doing well. That has led to strong, double-digit growth in AFFO/share. That is a limited partnership’s equivalent of free cash flow and what ultimately funds the payouts.

The management has a target of 5% to 9% CAGR distribution growth.