Why I Continue Buying Shares of This Healthy and Secure 5.3%-Yielding Dividend Stock

This dividend stock offers a high yield and significant long-term growth potential. It’s also one of the safest stocks you can buy.

| More on:
analyze data

Image source: Getty Images

When it comes to investing, having patience and investing for the long haul is well-known to be one of the most important strategies we can employ. However, in addition to keeping your emotions in check and giving your money a long runway of growth, it’s also paramount to find the highest-quality stocks to buy, whether they are dividend, growth, or value stocks.

That’s why I continue to buy shares of Brookfield Infrastructure Partners (TSX:BIP.UN), which is, in my opinion, one of the very best stocks on the TSX, especially to buy and hold for years to come.

What’s most intriguing about Brookfield is that it’s one of the best stocks in Canada at offering investors both a resilient, defensive business and one that can grow significantly.

When you can find a stock that does both, protects your capital in times of turmoil, and offers significant growth potential over the long haul, they’re often some of the best companies on the market.

Although it owns assets that a typical low-risk, defensive business would own — one that’s safe and reliable but also doesn’t offer significant growth potential — Brookfield is also consistently looking at where it can find growth next and which of its assets it can sell to recycle the capital into a new, higher potential opportunity.

That’s why, while Brookfield Infrastructure trades off its highs and offers a yield of roughly 5.3%, it’s a stock I continue to buy shares of.

In this environment, safe and secure dividend stocks are some of the best to buy

It’s never a bad idea to own safe, recession-resistant stocks, especially when the economic environment is so uncertain, such as what we continue to experience today.

However, as important as it is to own safe stocks that can protect your capital and reliable dividend stocks that can continue to earn you a return no matter what the state of the economy, owning too many defensive stocks can affect your portfolio’s growth potential over the long run, unless these stocks have significant growth potential themselves.

That’s why Brookfield is such an ideal stock to buy and hold for years. The infrastructure assets it owns, such as utilities, pipelines, railroads, ports and more, are all essential assets with robust and resilient operations. This ensures that Brookfield will see strong revenue and cash flow generation whether the economy is growing or potentially entering a recession.

Furthermore, with roughly two-thirds of Brookfield Infrastructure’s assets indexed to inflation, the company has a natural hedge against surging inflation or higher-for-longer interest rates.

Therefore, in addition to its long-term growth potential, Brookfield is one of the best dividend stocks to buy now because you can have confidence in its ability to remain profitable in the short term while also earning you an attractive return through its approximately 5.3% yield.

With that being said, though, the number one reason to buy Brookfield is for its significant growth potential, and not just the potential for significant capital gains, but also because Brookfield is consistently increasing the distribution it pays to investors as well.

Brookfield offers a tonne of long-term growth potential

I mentioned earlier that Brookfield is constantly looking at selling off assets and recycling that capital into new opportunities, which is why it can consistently grow the cash flow it generates as well as the funds it distributes to investors.

However, in addition to selling off assets that it has turned around and improved and looking for new undervalued opportunities it believes it can buy cheaply and grow organically, Brookfield is also looking for essential assets in growing industries, such as the data centres and telecom towers it’s been acquiring in recent years.

This way not only can it use its expertise to improve the profitability of the assets it owns, but by investing in businesses that have natural organic growth potential, Brookfield can improve its own growth prospects.

Therefore, if you’ve got cash to invest today and want a high-quality stock you can buy now and hold for years or even decades to come, there’s no question that Brookfield Infrastructure is certainly one of the best dividend stocks on the TSX to consider today.

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 Daniel Da Costa has positions in Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

More on Dividend Stocks

food restaurants
Dividend Stocks

Better Stock to Buy Now: Tim Hortons or Starbucks?

Starbucks and Restaurant Brands International are two blue-chip dividend stocks that trade at a discount to consensus price targets.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

1 Growth Stock With Legit Potential to Outperform the Market

Identifying the stocks that have outperformed the market (in the past) is relatively easy, but selecting the ones that will…

Read more »

money cash dividends
Dividend Stocks

Passive Income: The Investment Needed to Yield $1,000 Per Annum

Do you want to generate a juicy passive-income stream? Here's a trio of stocks that can generate a yield of…

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Dividend Stocks

Invest $10,000 in This Dividend Stock for $1,500.50 in Passive Income

If you have $10,000 to invest, then you likely want a core asset you can set and forget. Which is…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Here’s the Average TFSA Balance in 2024

The average TFSA balance has steadily risen over the last six years and surpassed $41,510 in 2023. Will the TFSA…

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

TFSA Set and Forget: 2 Dividend-Growth Superstars for the Long Run

I'd look to buy and forget CN Rail (TSX:CNR) and another Canadian dividend-growth sensation for decades at a time.

Read more »

Caution, careful
Dividend Stocks

Here’s Why I Wouldn’t Touch This TSX Stock With a 50-Foot Pole

This TSX stock has seen shares rise higher, with demand for oil increasing, and yet the company could be in…

Read more »

Payday ringed on a calendar
Dividend Stocks

1 Passive-Income Stream and 1 Dividend Stock for $781.48 in Monthly Cash

Looking for passive income? Don't take out a loan with that high interest involved. Instead, consider this method for years…

Read more »