Is Brookfield Infrastructure Stock a Buy Post Q1 Earnings?

Brookfield Infrastructure (TSX: BIP.UN)(NYSE: BIP) announced its results for the first quarter of 2022 yesterday and reported a net income of US$70 million compared to US$190 million in the year-ago period. However, its funds from operations or FFO for Q1 surged 14% year over year to US$493 million, which is the highest in the company’s history.

Brookfield Infrastructure explained FFO per unit stood at US$0.96 and was 3% higher due to shares issued “in conjunction with the acquisition of Inter Pipeline and the equity offering completed in November that has yet to meaningfully contribute to results.”

After excluding the weather-related outperformance from its gas-storage business last year, FFO was up 35% on a comparable basis and rose by 22% on a per-unit basis. The company’s organic growth was impressive at 10% on the back of rising inflation numbers, which positively impacted tariffs.

Sam Pollock, the CEO of Brookfield Infrastructure, explained that an inflationary market environment continues to favourably impact its business, allowing it to report record results in Q1. In addition to inflation, GDP-related volume increases and higher commodity prices contributed to organic growth in Q1.

Why Brookfield Infrastructure is a top stock to buy right now

Brookfield Infrastructure is one of the largest companies in Canada with a diversified portfolio of top-notch infrastructure businesses. It has operations across verticals such as utilities, transportation, data infrastructure, and energy midstream that allow the entity to generate steady cash flows.

Further, a majority of these cash flows are backed by long-term contracts and government-regulated rate structures. Its strong fundamentals, enviable financial profile, and investment-grade credit rating have allowed the company to increase the dividend for 13 consecutive years. It also provides Brookfield Infrastructure with the flexibility to reinvest cash flows in capital expenditures to increase its base of cash-generating assets.

On a same-store basis, Brookfield’s utility business increased funds from operations by 8%, while FFO for the transport business grew by 14%. Comparatively, FFO for the midstream business stood at US$196 million compared to US$146 million in the year-ago period, while its data business reported an FFO of YS$58 million compared to US$60 million in Q1 of 2021.

What’s next for Brookfield Infrastructure stock and investors?

Brookfield Infrastructure emphasized that it ploughed in US$750 million in two utility investments. It also announced an agreement to acquire Uniti Group in a take-private transaction worth AU$3.7 billion via a 50/50 joint venture partnership. Uniti provides wholesale and retail telecommunications services to businesses and customers in Australia.

Last year, Brookfield Infrastructure spent US$3 billion on multiple deals and even acquired a Canadian midstream company. It remains bullish on the infrastructure investment opportunity given countries all over the world would need to invest trillions of dollars to develop infrastructure and support economic growth.

The company disclosed its board of directors has approved a three-for-two stock split, which should improve the liquidity of the stock and drive prices higher going forward.

Since 2008, Brookfield Infrastructure has delivered annual returns of almost 18% to investors, easily outpacing the S&P 500 Index, which has returned 11% annually in this period. The company’s dividend payouts have increased by 10% each year in the last 13 years, as its funds from operations have grown by 15% each year in this time frame.

Its diversified operations and solid financials make Brookfield Infrastructure a top stock to buy and hold right now.