1 Stock to Buy and Hold for the Next 30 Years

Here is why Brookfield Infrastructure Partners LP (TSX:BIP.UN)(NYSE:BIP) is an excellent long-term stock pick.

| More on:
Cogs turning against each other

Image source: Getty Images.

While it has its highs and lows, the stock market generally goes up over time. The average return of the market over the past 30 years is around 7%. This does not mean that every — or even the vast majority — of companies perform well; the average investor generally sees returns that are lower than those of the market. It can be difficult to find companies capable of keeping up with the market over long periods. However, I believe Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) may have what it takes; here is why. 

Brookfield’s business model

Brookfield owns and operates high-quality assets in several key sectors. These include the utilities sector, the energy sector, the transport sector, and the data infrastructure sector. Brookfield’s utilities segment is especially noteworthy since it accounts for the lion’s share of its earnings. The firm owns over $4 billion worth of asset within this segment across North America, Europe, Asia, and Australia. Much of Brookfield’s utilities business is regulated and supported by long-term contracts, which guarantees somewhat stable earnings.

In addition, most of these contracts are inflation-linked, which allows the company to increase the rates it charges to keep up with inflation. Brookfield can continue growing its business — and especially its utilities segments — by making acquisitions. Indeed, making shrewd acquisitions has been an essential factor in the company’s growth. Of course, acquisitions are subject to risks. However, Brookfield’s track record is indicative of a team that knows which companies to acquire and how to properly integrate these companies under its umbrella. 

Recent financial results

Brookfield’s latest earnings report was excellent. Though the firm’s net income decreased year over year, the two results aren’t comparable since last year’s includes an unusual gain. An apples-to-apples comparison reveals that Brookfield performed well, as its earnings increased across every major business segment. The firm’s utilities sector’s funds from operations (FFO) was $143 million, up from $139 million year over year, while the transport segment, energy segment, and data infrastructure segment grew their FFOs by 1.5%, 78%, and 58%, respectively. Brookfield’s FFO per unit increased by 13%. 

Brookfield made several acquisitions during the quarter. The Toronto-based firm bought an integrated telecommunications provider in New Zealand that provides broadband and wireless services to 2.5 million customers. Brookfield also acquired a rail business with operations in the U.S., Canada, the U.K., and Australia, and a majority stake in two U.S. natural gas pipelines that transport gas into Mexico. These acquisitions (among others) should help fuel Brookfield’s growth in the future. 

The bottom line

Brookfield’s business is tied to several key sectors of the economy, and the firm continues to grow its assets along with its earnings. As a bonus, the infrastructure company offers investors a dividend yield of 4.59% (at writing). Investors looking for a stock to buy and hold for a long time should consider purchasing shares of Brookfield. 

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 Prosper Bakiny has no position in any of the stocks mentioned. Brookfield Infrastructure Partners is a recommendation of Stock Advisor Canada.  

More on Energy Stocks

little girl in pilot costume playing and dreaming of flying over the sky
Energy Stocks

The U.S. Stocks Every Canadian Investor Needs to Know About

Boeing, UGI Corporation, and Exxon Mobil are three U.S. stocks I'd buy today.

Read more »

Silhouette of businessman sit on chair and hold a cigar and looking at the city in night.
Energy Stocks

Passive Income: How to Make $104 Per Month Tax Free in 20 Years

By simply choosing the right stock, and investing in it on a consistent basis, you can create massive passive income…

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Where to Invest in Oil Stocks in June 2023

Suncor Energy is a Canadian oil stock that's set up to benefit from strong oil prices, as it trades at…

Read more »

edit Sale sign, value, discount
Energy Stocks

Buy Alert: Major Canadian Energy Stocks Are on Sale in June 2023 

Did you hear of a June sale? Well, Canadian energy stocks are trading near their lows in June 2023. It's…

Read more »

Dollar symbol and Canadian flag on keyboard
Energy Stocks

Canadian Blue-Chip Stocks: The Best of the Best for June 2023

TSX blue-chip stocks such as Enbridge can help you generate steady gains and benefit from a high dividend yield in…

Read more »

oil and gas pipeline
Energy Stocks

Pipeline to Prosperity: Invest in Enbridge Stock and TC Energy

Canadian pipeline stocks are buy-and-hold stocks, as oil and gas exports significantly contribute to Canada's GDP.

Read more »

tsx today
Energy Stocks

TSX Today: What to Watch for in Stocks on Monday, June 5

An early morning rally in oil prices could lift TSX energy stocks at the open today.

Read more »

oil and natural gas
Energy Stocks

These Canadian Energy Stocks Are Bargain Buys for 2023

Here are two of the best Canadian energy stocks you can buy on the dip in 2023 to hold for…

Read more »