While the broader markets are near all-time highs, Brookfield Infrastructure (TSX: BIP.UN) is a TSX stock that is down 27% from record levels. However, the ongoing drawdown has raised the forward dividend yield to 5.7%, making it attractive to income-seeking investors.
Let’s see why Canadian investors could gain exposure to this blue-chip dividend stock right now.
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The bull case for the TSX stock
Brookfield Infrastructure Partners presents a compelling investment opportunity as it aims to capitalize on the artificial intelligence infrastructure boom.
Brookfield is a global infrastructure company that operates across four key segments: Utilities (electricity transmission, gas pipelines, and 8.4 million connections), Transport (21,000+ km of rail track and 3,300 km of motorways), Midstream (15,000 km of gas transmission pipelines and 570 billion cubic feet of storage), and Data (306,000 telecom towers, 28,000 km of fiber cables, and 140 data centres with one-gigawatt capacity).
BIP owns and operates essential infrastructure assets across the United States, Canada, Europe, Asia, and Latin America. In the second quarter (Q2) of 2025, Brookfield Infrastructure reported funds from operations (FFO) of US$638 million or US$0.81 per unit, an increase of 5% year over year. This growth was driven by strong organic performance above target ranges and contributions from strategic acquisitions.
The data segment grew its FFO by 45% year over year to US$113 million, which reflects the massive demand for AI infrastructure capabilities.
Notably, Brookfield has deployed US$1.3 billion across three transformative acquisitions this year, positioning BIP stock at the centre of critical infrastructure trends.
The US$9 billion Colonial Pipeline acquisition provides exposure to North America’s largest refined products pipeline system with attractive nine times EBITDA (earnings before interest, tax, depreciation, and amortization) multiples and mid-teen cash yields.
The Hotwire fibre acquisition captures the growing demand for high-speed connectivity, while the railcar leasing platform partnership with GATX strengthens BIP’s transportation infrastructure presence.
BIP has secured US$2.4 billion in asset sales year to date, which is an annual record. These strategic dispositions, including partial stakes in Australian export terminals and European data centres, showcase management’s ability to monetize mature assets at attractive valuations while retaining upside through continued ownership stakes. This capital-recycling strategy enables self-funded growth while maintaining exposure to high-quality infrastructure assets.
BIP’s Canadian midstream operations are benefiting from unprecedented demand drivers, including 12 gigawatts of requested data centre power demand in Alberta alone. LNG Canada’s production ramp and improved social license for energy development create substantial growth opportunities. BIP expects $650-750 million in EBITDA growth across its two largest midstream platforms through 2027.
BIP sits “at the nexus” of AI infrastructure deployment, with virtually all business segments benefiting from digitalization trends. Its diversified portfolio spanning power, data centres, transportation, and midstream assets positions it perfectly to capture the generational infrastructure investment opportunity driven by artificial intelligence adoption globally.
Is the TSX dividend stock undervalued?
Brookfield Infrastructure is forecast to expand its free cash flow from US$287 million in 2024 to US$5.2 billion in 2029. Comparatively, adjusted FFO per share is estimated to increase from US$2.35 in 2024 to US$3.25 in 2027.
If the TSX stock is priced at 12 times forward AFFO, it will trade around US$39 in early 2027, indicating an upside potential of 30% from current levels. Comparatively, dividend per share is expected to increase from US$1.62 in 2024 to US$2.21 in 2029. If we include dividend payments, cumulative returns could be closer to 40% over the next 18 months.
