Valued at a market cap of US$14.9 billion, Brookfield Infrastructure (TSX:BIP.UN) stock has returned 156% to shareholders in the last 10 years after adjusting for dividend reinvestments. While the large-cap TSX stock has delivered inflation-beating returns to investors, let’s see if it can continue to outpace the broader markets over the next five years.
Brookfield Infrastructure stock is down 28% from all-time highs, but it offers a tasty dividend yield of 4.2%. So, is the TSX dividend stock a good buy right now?
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Should you own this TSX stock today?
Brookfield Infrastructure Partners is one of the world’s largest owners and operators of critical global infrastructure networks. Its portfolio of cash-generating assets facilitates the movement and storage of energy, water, freight, passengers, and data.
As a pure-play, publicly traded infrastructure vehicle, it invests in premier utilities, midstream, transport, and data operations with stable cash flows, high margins, and strong growth prospects.
The partnership offers globally diversified, high-quality assets backed by an experienced management team with a proven track record. Leveraging Brookfield’s extensive network, it identifies acquisition opportunities in the expanding global infrastructure market, which requires significant ongoing capital investment.
Brookfield Infrastructure provides investors with stable, growing distributions targeting 5-9% annual growth. The company aims to deliver strong risk-adjusted total returns through its sustainable long-term distribution strategy.
A strong performance in Q1 of 2025
Brookfield Infrastructure Partners delivered a solid performance in the first quarter (Q1) of 2025, generating funds from operations (FFO) of US$0.82 per unit, up 12% when normalized for foreign exchange impacts. Total FFO reached US$646 million, a 5% increase over the prior year, driven by strong inflation indexation, higher revenues across critical infrastructure networks, and the commissioning of over US$1.3 billion in new capital projects.
Brookfield demonstrated resilience amid trade policy uncertainties. The company’s management emphasized that direct tariff impacts are minimal since Brookfield operates regional networks rather than manufacturing goods subject to trade restrictions. While acknowledging potential second and third-order effects on customers, Brookfield views its highly contracted, inflation-indexed cash flows as providing strong defensive characteristics.
Brookfield capitalized on market volatility through strategic capital recycling. In Q1, it secured US$1.4 billion in sale proceeds and is on track towards its US$5-6 billion asset monetization target over two years. Notable transactions include the pending sale of its Australian container terminal operation for US$1.2 billion and a minority stake sale in its intermodal logistics portfolio.
Brookfield’s data segment emerged as a standout performer, with FFO surging 50% to US$102 million, driven by strong organic growth in data centers and contribution from recent acquisitions. Meanwhile, the utilities and transport segments delivered stable results despite foreign exchange headwinds.
Looking ahead, Brookfield sees the current environment of deglobalization and U.S. manufacturing onshoring as creating substantial long-term investment opportunities, positioning the company to benefit from what management describes as an “infrastructure super cycle.”
Is the TSX dividend stock undervalued?
Analysts expect Brookfield to increase its adjusted FFO per share from US$2.35 in 2024 to US$3.25 in 2027. Today, it trades at a trailing adjusted FFO multiple of 13.7 times, which is reasonable given its growth estimates.
If the TSX dividend stock maintains a similar multiple, it will trade around US$45 in May 2028, indicating an upside potential of 45% from current levels. Brookfield pays shareholders an annual dividend of US$1.72, indicating a sustainable payout ratio of 53%.
If we include its dividend payouts, cumulative returns could be closer to 60% in the next three years.
