2 Top Infrastructure Stocks to Buy on the TSX Today

Top TSX infrastructure stocks such as Stantec have delivered outsized gains to shareholders and continue to remain top investments today.

| More on:
Businessmen teamwork brainstorming meeting.

Image source: Getty Images

Infrastructure is the backbone of any economy, as it is crucial to transport and store water, power, energy, passengers, products, and data. A well-maintained and robust infrastructure is essential to the overall health of the economy.

However, it is expensive to build and maintain infrastructure projects, making it unaffordable for most governments. Instead, several infrastructure projects are completed in partnership with the private sector.

According to a report from Swiss Re, global infrastructure spending is forecast to surge past a whopping US$80 trillion through 2040, making infrastructure stocks the top investment options today. Here are two top TSX infrastructure stocks you can consider buying today.

Is Stantec stock a good buy right now?

Valued at $10 billion by market cap, Stantec (TSX:STN) provides services to public and private sector clients in North America and other international markets. It offers consulting services in verticals such as engineering, architecture, project management, and environmental sciences, among others.

Stantec stock has surged 267% in the past 10 years after adjusting for dividends. In this period, the TSX index has returned just 111% to shareholders.

Despite a challenging macro environment, Stantec reported net sales of $1.3 billion in the second quarter (Q2) of 2023, an increase of 11.2% year over year. Each of its business segments delivered net revenue growth for six consecutive quarters. The company also increased its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin by 20 basis points to 16.9% in the quarter.

Stantec ended Q2 with an order backlog of $6.6 billion, which was an all-time high, reflecting a 10% growth compared to December 2022. Analysts expect Stantec to increase sales by 12% to $5 billion and earnings by 13% to $3.53 per share in 2023.

Priced at two times forward sales and 25 times forward earnings, Stantec stock is not too expensive, given its growth estimates. The consistent expansion of Stantec’s earnings has allowed it to increase dividends by 9.5% annually in the last 11 years.

What is the price target for Brookfield Infrastructure stock?

Down 40% from all-time highs, Brookfield Infrastructure (TSX:BIP.UN) currently offers you a dividend yield of 5.8%. Despite the massive pullback, the TSX stock has returned 253% to shareholders since October 2013, after accounting for dividends.

Brookfield Infrastructure is forecast to end 2023 with FFO, or funds from operations, of US$3.05 per share, an increase of 13% compared to the year-ago period. Given it pays shareholders an annual dividend of US$1.53 per share, BIP has a payout ratio of around 50%, which is quite sustainable.

The drawdown in BIP stock has meant it trades a 9.3 times FFO, which is very cheap. Moreover, BIP is forecast to grow FFO per share at 12% annually in the next three years.

Brookfield Infrastructure owns and operates a diversified base of cash-generating assets across verticals such as transport, midstream, data centres, and toll roads. Its cash flows are linked to inflation, and the company continues to expand its FFO via growth projects and accretive acquisitions.

Due to its compelling valuation, BIP stock trades at a discount of 70% to consensus price target estimates.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

More on Investing

Payday ringed on a calendar
Dividend Stocks

3 Top TSX Passive-Income Stocks That Pay Out Every Month

Here are some of the best TSX stocks for passive monthly income. Investors should explore to see if they're a…

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Remarkably Cheap TSX Stocks to Buy Right Now

These three cheap TSX stocks are some of the best buys on the TSX, and yet their share price is…

Read more »

think thought consider
Dividend Stocks

This Dividend Stock Could Create $1,353 in Passive Income in 2024

This dividend stock can create massive passive income from two sources, so don't miss out before a recovery in 2024!

Read more »

Increasing yield
Dividend Stocks

TFSA Investors: Buy This Top Bank Stock for High-Yielding Dividends

Generate a superior passive-income stream by investing in this high-yielding dividend stock from Canada’s Big Six banks.

Read more »

grow money, wealth build
Dividend Stocks

2 of the Best TSX Dividend Stocks I Plan on Holding Forever

High-yield TSX dividend stocks, such as Enbridge, offer you tasty yields and trade at significant discounts to consensus price targets.

Read more »


CNR Stock: Should You Buy Today?

Canadian National Railway has been hit in recent quarters, as economic growth has slowed, with CNR stock declining 10% in…

Read more »

Family relationship with bond and care
Dividend Stocks

TFSA Investors: 3 Cheap Canadian Stocks for Retirees

These three Canadian stocks are super cheap for retirees looking for a great buy that will last the test of…

Read more »

calculate and analyze stock
Dividend Stocks

CPP Disability Benefits: Here’s How Much You Could Get

Not everybody can get CPP disability benefits. If you want some passive income, consider investing in Royal Bank of Canada…

Read more »