Where Will Brookfield Infrastructure Partners Be in 5 Years?

Let’s look at Brookfield Infrastructure Partners to see where it’s going to be in five years.

| More on:
question marks written reminders tickets

Image source: Getty Images

Shares of Brookfield Infrastructure Partners (TSX:BIP.UN) have taken investors on a wild ride over the last year. Bottoming out back in October, the company has since come back up in share price. That being said, BIP stock is still down 10% in the last year alone.

With all this volatility and a share price still down, investors are likely wondering if the stock is still a good investment for long-term gains. Or at least over the next five years. To consider that, we’ll look at what the company, and infrastructure in general, has in store over that time.

Infrastructure: Growth or no?

Before we even consider whether BIP stock is a good investment, let’s consider infrastructure as whole. There are reasons to be optimistic and pessimistic during that time, as we move from an economic downturn back to a recovered economy.

The United States in particular is likely to see a huge amount of development in infrastructure — particularly for roads, bridges, broadband, and water systems. Analysts predict this will lead to a rise in infrastructure spending in the next five years by whoever is voted in as president come November. 

However, data centres will likely be close behind. There remains significant need for these data centres, and even more so with the investment for artificial intelligence (AI). Yet that won’t come easily, with challenges including inflation, labour shortages, as well as general red tape.

Globally, however, infrastructure will remain a key focus in the next five years. In fact, spending is predicted to reach around US$9 trillion by 2025 alone — especially in developing economies such as China. So, while the pace will grow, it’s likely to be slower than originally hoped for by investors.

Where BIP stock fits in

As for BIP stock, the company has grown significantly in the last decade. It first focused on timber properties and electricity transmission lines. Since then, it’s expanded and diversified through acquisitions.

Now, the company has a global operation that spans Australia, India, and Colombia. Even during economic challenges during the COVID-19 pandemic, the company managed to continue growth through strategic acquisitions. However, things have changed as of late.

Shifting focus, but earnings need to catch up

Moving away from timber, the company is looking ahead. BIP stock is now investing in critical infrastructure such as cell towers but also data centres. And this should bring in continued revenue growth. However, the company’s earnings haven’t growth as fast as its revenue. With debt and interest rising, this could continue to hamper earnings growth.

Yet the company did make a major move lately that could bring investors back on board. This was after raising US$28 billion for its largest-ever fund, “wagering on infrastructure assets the company believes would benefit from a shift to ‘deglobalization’ given recent geopolitical tensions.”

Bottom line

While this recent news brought shares up slightly, there is still more growth needed to really see BIP stock as a growth stock for the future. For now, the immediate future of the next five years looks uncertain at best.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Magna made the list!

It’s likely that it will be slow moving for investments into infrastructure with interest rates still high. In fact, it might take that whole five years to see earnings catch up with revenue.

That being said, if you hope to hold longer than then, you could be in for slow but steady growth as the company recovers. And in that time, you’ll receive a 5.52% dividend yield. So, as always, make sure to look at your own portfolio and risk tolerance before considering BIP stock.

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 Amy Legate-Wolfe 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 Dividend Stocks

value for money
Dividend Stocks

Canadian Tire Is Paying $7 per Share in Dividends. Time to Buy the Stock?

With Canadian Tire trading ultra-cheap and offering a safe dividend yield of more than 5.5%, is it one of the…

Read more »

Payday ringed on a calendar
Dividend Stocks

Secure Your Future: Top 2 Monthly Dividend Stocks to Buy in 2024

Here are two top Canadian monthly dividend stocks you can buy today to minimize risks to your portfolio.

Read more »

woman data analyze
Dividend Stocks

Passive Income: How Much to Invest to Get $6,000 Each Year

Have you ever wondered how much to invest to get $6,000 in passive income? It's easier than you think, and…

Read more »

Dividend Stocks

A Dividend Giant I’d Buy Over Suncor Right Now

Suncor stock is a TSX energy giant that trades at a compelling valuation while paying shareholders a tasty dividend yield.…

Read more »

oil and natural gas
Dividend Stocks

3 No-Brainer Dividend Stocks to Buy Right Now for Less Than $200

These dividend stocks could continue to increase dividends and enhance shareholders’ returns.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Here’s the Average CPP Benefit at Age 65 in 2024

Dividend stocks like Fortis Inc (TSX:FTS) can supplement the income you get from CPP.

Read more »

Airport and plane
Dividend Stocks

Is Air Canada a Buy, Hold, or Sell?

Air Canada (TSX:AC) stock is very cheap. Does that make it a buy?

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Invest $100 Each Month to Create $260.79 in Passive Income in 2024

Investors who only have a bit to put aside should certainly consider this ETF. It offers you the passive income…

Read more »