2 Infrastructure Dividend Kings Yielding 5% or More to Buy and Hold Forever

Boost income and growth by adding Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Brookfield Infrastructure Partners LP (TSX:BIP.UN)(NYSE:BIP) to your portfolio.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An asset class that remains underappreciated and fails to attract considerable attention from investors is infrastructure. While the industry doesn’t boast the sensational returns associated with hot growth stocks like marijuana companies, it provides a stable mix of steadily expanding income and capital growth. The appeal of infrastructure stocks is enhanced by their considerable defensive characteristics, which help to reduce volatility and protect earnings during market downturns.

They are also positioned to grow at a solid clip because a combination of aging infrastructure, an increasing lack of capacity, and a massive multi-trillion-dollar spending shortfall will act as powerful tailwinds. Much of that deficiency in infrastructure investment will have to be covered by the private sector because of the growing fiscal pressures being felt by governments globally, with many still not having fully recovered from the global financial crisis a decade ago.

Here are two top dividend-paying infrastructure stocks that should be in every portfolio.

Crucial energy infrastructure

Enbridge (TSX:ENB)(NYSE:ENB) may be the sixth most shorted stock on the TSX after the Big Five banks, but its combination of a regularly growing dividend yielding almost 6% and solid growth potential make it an outstanding stock to own. The midstream services company is a vital link between Canada’s energy patch and U.S. refining markets.

Enbridge reported solid 2018 results, including an impressive 36% year-over-year increase in distributable cash flow. Earnings will keep expanding at a solid clip, because a substantial shortage of energy infrastructure, including pipeline exit capacity, growing domestic hydrocarbon production, and new assets coming online will see the volume of petroleum transported expand.

Enbridge has $16 billion of secured growth projects scheduled to be completed by the end of 2020. The most important project is the $9 billion Line 3 Replacement Update, which is expected to significantly bolster the volume of crude, which can be transported to the U.S..

At the midpoint of its 2019 guidance, Enbridge is forecasting distributable cash flow of $4.45 per share, which is 5.5% greater than 2018. That will support the planned 10% dividend hike for 2019 and a further 10% in 2020, boosting the sustainability of Enbridge’s juicy yield. This emphasizes why Enbridge should be a core holding in every investors’ portfolio.

Globally diverse assets

Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) is one of the largest publicly listed infrastructure businesses globally. It owns and operates a diversified portfolio of critical infrastructure spanning ports, energy utilities, rail roads, toll roads, data centres, and telecommunication towers. Brookfield Infrastructure has gained a mere 5% over the last year, creating an opportunity for investors.

The partnership has hiked its distribution for the last 11 years, giving it a tasty yield of just under 5%. The business possesses solid defensive characteristics, including a wide economic moat, operating in oligopolistic markets, and generating 95% of its earnings from contracted sources. These attributes protect it from economic slumps while enhancing Brookfield Infrastructure’s growth prospects.

The partnership has a long history of expanding its earnings through a combination of capital recycling, organic growth, and making opportunistic acquisitions. The last major deal completed by Brookfield Infrastructure was the $4.3 billion acquisition of Enercare — one of North America’s leading energy solutions companies — adding 1.6 million customers to its client base.

Prior to that acquisition, the partnership completed the $4.3 billion purchase of Enbridge’s Western Canadian midstream services assets, which closed during October 2018. That saw Brookfield Infrastructure become a leading player in Western Canada’s natural gas patch and, in conjunction with the Enercare deal, will boost funds from operations and EBITDA. It also further bolstered its economic moat because of the inelastic demand for energy, which is a crucial driver of modern economic activity.

Brookfield Infrastructure also recently reloaded its coffers, completing a fully subscribed $100 million preferred share offering in February 2019. This indicates that the partnership could be on the prowl for further opportunistic and accretive deals over the course of this year.

Should you invest $1,000 in Sun Life Financial right now?

Before you buy stock in Sun Life Financial, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Sun Life Financial wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Matt Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada. Brookfield Infrastructure Partners is a recommendation of Stock Advisor Canada.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Why I’d Add This Top TSX Dividend Stock to My TFSA During the Current Dip

The market is full of volatility right now. Fortunately, this top TSX dividend trades at a discount and pays a…

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $20,000 in 2 TSX Stocks for $1,421.09 in Passive Income

Are you looking to bump up your passive income? Then consider these two TSX stocks.

Read more »

A plant grows from coins.
Dividend Stocks

Where I’d Invest in Canadian Value Stocks for Long-Term Compounding

When markets plunge, Warren Buffett's wisdom shines: Get greedy when others are fearful. Canadian value stocks like Scotiabank await patient…

Read more »

analyze data
Dividend Stocks

How I’d Invest $28,000 in Canadian Natural Resource Stock to Amass Personal Wealth

Investing in TSX dividend stocks such as Enbridge can help you earn a passive-income stream in 2025.

Read more »

hand stacks coins
Dividend Stocks

Got $400? How I’d Start Building Income With 3 High-Yield Stocks for the Long Term

These high-yield dividend stocks have a solid payout history, making them compelling investments to generate passive income.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Invest $10,000 in Canadian Value Stocks for Monthly Dividend Income

A $10,000-diversified portfolio of value stocks focusing on dividend safety, yield, growth, and payment schedules can provide a reliable source…

Read more »