Brookfield Infrastructure Partners (BIP) Could Be a Great Choice
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Brookfield Infrastructure Partners in Focus
Brookfield Infrastructure Partners (BIP) is headquartered in Hamilton, and is in the Finance sector. The stock has seen a price change of -0.6% since the start of the year. The operator of utility, transportation and energy assets is currently shelling out a dividend of $0.41 per share, with a dividend yield of 5.18%. This compares to the REIT and Equity Trust - Other industry's yield of 4.37% and the S&P 500's yield of 1.58%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.62 is up 5.9% from last year. Over the last 5 years, Brookfield Infrastructure Partners has increased its dividend 4 times on a year-over-year basis for an average annual increase of 4.39%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Brookfield Infrastructure's payout ratio is 54%, which means it paid out 54% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BIP for this fiscal year. The Zacks Consensus Estimate for 2024 is $3.23 per share, representing a year-over-year earnings growth rate of 9.49%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, BIP presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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