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A Top Canadian Dividend Stock Demonstrates Why We Need to Own it for TFSA Growth and Income

TFSA investors invest in their TFSAs either as another way of building their retirement nest egg or to help with their savings in general, maybe for a specific purchase or just for a rainy day.

Seeing your money grow in a tax-free environment, thereby maximizing returns, is what it’s all about.

So, it is well worth it to regularly invest your dollars in your TFSA for long-term wealth creation.

Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) is a top Canadian dividend stock that has proven to be a cash generator for investors in the past, and this, I believe, will continue in the future.

Brookfield reported first-quarter 2019 results this week, and while quarterly results are not necessarily what we should be concerned with, because we should be focused on the long term, these results give us more indications of why this stock is a top dividend stock.

Cash flow growth

Funds from operations in the quarter totalled $351 million, a 5.4% increase over the same period last year, reflecting strength in the energy segment (+62%) and the data infrastructure segment (+47%).

Dividend growth

Since 2009, Brookfield has grown its funds from operations by a compound annual growth rate (CAGR) of 19% and it’s per-unit distribution by a CAGR of 11%.

Management has increased expectations for dividend growth and is now targeting 6-9% annual growth in distributions, and all indications point to the company coming in at the top end of this range.

Executing future growth plans

I wrote an article a few weeks ago talking about the sectors that Brookfield is looking to that will provide growth and sustainability well into the future.

The bulk of its new investments currently are in the energy and data infrastructure sectors, which are seen as high-growth areas, and this makes sense to me.

The company reported on some interesting investments this quarter, such as the acquisition of federally regulated Western Canadian midstream assets, which will close in the third quarter, the $230 million Indian natural gas pipeline acquisition, and the $200 million acquisition of Ascenty, a data centre operator in South America.

Liquidity remains strong

The first quarter also provided an update on Brookfield’s plan to sell off non-core assets, with the sale of its European bulk port operations for proceeds of $130 million.

The company is on track to sell $1.5-2 billion in the next 12-18 months.

So, there is no shortage of opportunities and Brookfield remains ready to pounce, with ample liquidity and the backing of Brookfield Asset Management.

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Fool contributor Karen Thomas has no position in any of the stocks mentioned. The Motley Fool owns shares of Brookfield Asset Management and BROOKFIELD ASSET MANAGEMENT INC. CL.A LV. Brookfield Infrastructure Partners is a recommendation of Stock Advisor Canada.

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