Many countries allocate billions of dollars for infrastructure development to transform various sectors and help power economic growth. Canada ranks high in this area, as it strengthens its infrastructure landscape. For long-term investors, infrastructure stocks are valuable additions to their portfolios.
Brookfield Infrastructure Partners (TSX: BIP.UN) and Badger Infrastructure Solutions (TSX: BDGI) are solid choices and the top names you can buy on Canada’s stock market today. The former owns assets across vital sectors, while the latter serves a diverse customer base covering nearly all critical industries.
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Infrastructure giant
Brookfield Infrastructure is a subsidiary and operating unit of Brookfield Asset Management. It acquires and manages infrastructure assets such as data centres, midstream energy, transportation, and utilities. The $16.16 billion company commissioned about $1 billion of capital projects in the past year, and the pursuit of available opportunities is ongoing.
Management believes the current environment is ripe for capital deployment. Brookfield Infrastructure expects the returns on its 2023 deployment on new investments to exceed the 12-15% target. Also, it would provide some of the best risk-adjusted returns not seen in the last 10 years.
In the first nine months of 2023, revenue and net income increased 20.9% and 8.5% year over year to US$12.96 billion and US$1.17 billion. According to its chief executive officer (CEO), Sam Pollock, the company delivered on all its strategic initiatives thus far in 2023.
The year-to-date financial results also demonstrate Brookfield’s ability to use its size, scale and diversification to recycle capital at good valuations while investing at higher returns on new investments. Pollock adds the Q4 2023 results will reflect the contributions of the new investments.
Brookfield Infrastructure is excited about growing its data centre platform. Besides the closing of two acquisitions (Data4 and Compass Datacenters), the company will acquire Cyxtera Technologies. While the firm is bankrupt, it’s a compelling opportunity.
If you invest today ($35.24 per share), the top-tier infrastructure stock pays a mouth-watering 5.72% dividend. The board of directors approved and recently declared a 6% dividend hike. With several organic drivers expected to accelerate business growth, dividend boosts are possible.
Market analysts are bullish on BIP.UN. Their 12-month average price target is $61.56 — a 74.7% upside potential.
Top performer
Badger Infrastructure Solutions is well known for its non-destructive excavating and related services in North America. The stock is outperforming in 2023, and at $38.41 per share, investors are up 46.58% year to date and enjoy a 1.78% dividend.
The $1.32 billion company also works for contractors and facility owners in the infrastructure and general commercial construction industries. Management said Badger’s sales resources align with market and customer opportunities. It should help drive market penetration in key markets.
In the third quarter (Q3) of 2023, total revenues increased 19.6% versus Q3 2023 to a record US$195.55 million. The net earnings jumped 60.4% year over year to US$23.28 million. Badger’s president and CEO Robert Blackadar is pleased with the continued business growth. He said, “The team has performed exceptionally well through the busy construction season, which positions Badger for the balance of the year.”
Long-term plays
TSX’s top infrastructure stocks are excellent long-term plays. Brookfield Infrastructure Partners and Badger Infrastructure Solutions have long growth runways and should deliver healthy returns.
