This High-Yield Stock Just Got Even More Compelling

Brookfield Infrastructure Partners LP (TSX:BIP.UN)(NYSE:BIP) is a compelling buy at these levels and is getting better. It has a fantastic yield, great assets, and one more factor that has made it a must-own stock.

| More on:
Target. Stand out from the crowd

Image source: Getty Images

Brookfield Asset Management has been a great investment over the years. It’s been a great capital allocator with fantastic underlying assets. The yield has been relatively low, though. As a result, income-focused investors have often leaned towards owning subsidiaries rather than the parent.

One really annoying aspect of owning shares of Brookfield Asset Management subsidiaries is finally remedied. In the past, when you wanted to buy a higher-yielding stock, like Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP), you would be subject to all the annoyance and extra tax implications that come with being a limited partnership.

The benefits

This wasn’t a problem if you held the shares in a tax-sheltered account. However, it was a pain when you bought shares in a margin account. Previously, the only way to own shares with a favourably taxed dividend was to own the parent company, Brookfield Asset Management.

In order to solve this issue, Brookfield decided to split shares of its company, offering corporate shares to existing investors. These shares are traded in the same way as the limited partnership shares but give investors the choice to have the tax advantages associated with a corporation. The new shares are Brookfield Infrastructure Corp. (TSX:BIPC)(NYSE:BIPC). 

This share structure is beneficial to investors holding this stock in margin accounts because of the tax benefit. It is also positive because of the fact it should be more attractive to American investors. Previously, hedge funds and other institutions were not attracted to the limited partnership structure.

Infrastructure is going to be big

Brookfield Infrastructure is one name that is ideal as a holding in the upcoming years. Governments want to kick-start their countries with serious fiscal spending. Infrastructure is often a recipient of that spending. Brookfield has projects located around the globe, so they should be well positioned to make use of that money in many regions of the world.

The yield is attractive

Although the new corporate shares have no history, the LP shares have an eleven-year track record of dividend increases. The last increase of 7% speaks to the confidence that the company has in maintaining and increasing its dividend. The company is hoping to keep increasing that yield for years to come.

The dividend should continue to be supported by its operations, even in spite of the current crisis. Although its energy infrastructure income could be hit, other aspects of its business should be safe or even grow. Its data centres will almost certainly remain in demand, as more people use the internet to communicate, conduct business, and buy merchandise. And its water infrastructure will certainly be needed.

The bottom line

Brookfield infrastructure is a company that you should own. This crisis gives you the opportunity to buy shares at a discounted price, inflating the yield on your investing dollar. The company made the shares even more attractive with a new share structure that is beneficial for those holding shares in a taxable account and should draw in more foreign investment. Add this infrastructure stock today to build income for the future.

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 Kris Knutson owns shares of BROOKFIELD INFRA PARTNERS LP UNITS. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV, BROOKFIELD INFRA PARTNERS LP UNITS, and Brookfield Infrastructure Partners.

More on Dividend Stocks

money cash dividends
Dividend Stocks

TFSA: 3 of the Best Canadian Dividend Stocks to Buy This Year

Are you looking for some of the best Canadian Dividend stocks to buy this year? Here are three great options…

Read more »

Man data analyze
Dividend Stocks

2 Recession-Tough Stocks to Buy in February 2023

TSX stocks, such as Jamieson Wellness, are trading at compelling valuations and might deliver stellar gains to investors.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

Defensive Investors: 3 Stocks to Shore Up Your Portfolio

Fortis is a defensive stock with an impressive track record.

Read more »

edit Woman calculating figures next to a laptop
Dividend Stocks

Passive Income: 2 Cheap Stocks to Buy and Never Sell

Buying dividend stocks cheap and discounted is a strategy many value investors pursue to maximize the return potential.

Read more »

Female friends enjoying their dessert together at a mall
Dividend Stocks

Dividend Stocks: Will Debt Load Put a Damper on This Top Stock in 2023?

This dividend stock has a very solid track record of revenue and cash flow growth, ,as well as dividend growth,…

Read more »

A plant grows from coins.
Dividend Stocks

How to Invest in One of the Most Important Commodities in the World (It’s Not Gold)

Many things we take for granted may offer economic value and a powerful investment opportunity beyond commodities like gold or…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Need Passive Income? Turn $15,000 Into $1,016 Annually With These 2 Dividend Stocks

Canadian investors with limited capital can create passive-income streams from two high-yield dividend stocks.

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

Why Brookfield Infrastructure Partners Stock Rose 11.8% Last Month

Most, if not all, investors could do well by buying quality dividend stocks like Brookfield Infrastructure Partners (TSX:BIP.UN) on dips.

Read more »