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 Brookfield Infrastructure Partners right now?

Before you buy stock in Brookfield Infrastructure Partners, 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 Brookfield Infrastructure Partners 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

dividend growth for passive income
Dividend Stocks

Why I’d Invest in Canadian Value Stocks for Both Stability and Growth

Three Canadian value stocks are buying opportunities for investors looking for stability and growth.

Read more »

investment research
Dividend Stocks

Got $15,000? 3 Blue-Chip Stocks Every Canadian Should Consider

Here's why investing in blue-chip TSX stocks such as CNQ and CNR should derive outsized gains in 2025 and beyond.

Read more »

protect, safe, trust
Dividend Stocks

Where I’d Allocate $20,000 in 2 Safer High-Yield Dividend Stocks for Retirement Needs

Here are two safer, high-yield dividend stocks I'm looking at for my retirement needs.

Read more »

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

3 Reasons I’m Considering Enbridge Stock for a $5,000 Investment This April

I'm considering Enbridge stock to provide some defensive appeal and a juicy dividend to my long-term portfolio.

Read more »

monthly desk calendar
Dividend Stocks

A 9.2% Dividend Stock Paying Cash Every Single Month

With one of the highest dividends out there, this dividend stock deserves attention in your portfolio.

Read more »

Happy golf player walks the course
Dividend Stocks

Build a Powerful Passive Income Portfolio With Just $20,000

If you are worried that the bear market could reduce your savings, these stocks can build a powerful passive income…

Read more »

Hand Protecting Senior Couple
Dividend Stocks

How I’d Use My $7,000 TFSA Contribution to Start Retirement Planning

These TSX stocks have solid fundamentals and are well-positioned to deliver significant tax-free total returns over time.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

How to Turn Your TFSA Into a Gold Mine Starting With Only $10,000

It doesn't have to be complicated or scary. You can turn any portfolio into a major gold mine.

Read more »