A Top Dividend Stock to Kick-Start Your TFSA Retirement Portfolio

Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP) is a top dividend stock for TFSA and RRSP accounts.

| More on:

One of the best ways to kick-start your retirement savings is to purchase high-quality income stocks. There are stocks that have high-quality assets, histories of growing earnings and dividends, and positive outlooks. Simply put, these are buy-and-forget stocks.

A perfect starting point for investors is Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP).

Growth strategy

Brookfield Infrastructure is one of the largest owners and operators of global infrastructure networks that facilitate the movement and storage of energy, water, freight, passengers and data. The company’s high-growth strategy is centered on the acquisition of high-quality assets at great value.

It’s a strategy that has proven successful. Since its inception in 2008, shareholders have enjoyed a compound annual growth (CAGR) rate of 15%. The company has a targeted return on equity between 12% and 15%.

Thus far in 2018, the company has deployed $1.8 billion in capital towards six new investments. In addition, it delivered $350 million in organic growth initiatives. The company isn’t done.

Most recently, the company announced its intent to purchase Enercare for $4.3 billion. Enercare is one of North America’s largest home and commercial services companies. The deal is expected to close in the fourth quarter. It has also announced it’s in advanced discussion to acquire high-quality assets in India.

Dividend growth

Brookfield Infrastructure is a Canadian Dividend Aristocrat, having raised dividends for 10 consecutive years. Over that time span, it has raised dividends on average by 11% annually. Over the long term, the company has a targeted annual dividend-growth rate between 5% and 9%.

The company has also been a mainstay in National Bank’s Canadian Dividend All-Stars portfolio. This list of top dividend stocks screens for a yield greater than 4%, a sustainable and growing dividend, and upside potential.

Short-term headwinds

Year to date, the company has struggled with its share price, losing approximately 7% of its value. This is due in large part to rising interest rates and a rising U.S. dollar. In turn, the stronger dollar has had an adverse effect on emerging markets in which Brookfield has significant exposure. It is estimated that approximately 30% of the company’s operations are in Brazil.

Emerging markets have seen their fair share of ebbs and flows. The important part is that they remain emerging and still have plenty of attractive growth prospects. Given its exposure, Brookfield is well positioned to benefit from the inevitable bounce-back. Take Warren Buffett’s advice: when investors are fearful, it’s time to buy.

Analysts are unanimous in their coverage with 11 of 11 rating the company a buy or strong buy. The one-year average price target is $59.77, which implies 16% upside.

Brookfield Infrastructure is the perfect foundation for your TFSA or RRSP portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Mat Litalien has no position in any of the companies listed. Brookfield Infrastructure Partners is a recommendation of Stock Advisor Canada.  

More on Dividend Stocks

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »