Anytime you’re looking to buy a stock and add it to your portfolio, you should have confidence in its ability and potential over the long haul. Whether you’re looking for dividend stocks or growth stocks to buy, ensuring that the company has a solid foundation and has the ability to weather slowdowns in the economy is key to ensuring your success.
However, when you find a stock that ticks all the boxes, it’s not just one you can have confidence buying and holding for a few years; it’s a no-brainer investment that you’ll want to own forever.
The best stocks that long-term investors can buy are those that have a dominant position in their industry with the potential to continue expanding their operations consistently for years. Furthermore, those operations should ideally be at least somewhat defensive, or the company should have the strength to weather the storm during an economic downturn.
That’s why there’s no question that one of the biggest no-brainer investments on the TSX and one of the best dividend stocks to buy now and hold forever is Brookfield Infrastructure Partners (TSX:BIP.UN).
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Why Brookfield Infrastructure is one of the best dividend stocks to buy and hold forever
When it comes to finding stocks you can truly have confidence in, ones that check all the boxes investors look for, there might not be a better choice for Canadians than Brookfield Infrastructure.
First and foremost, as a company that owns a global portfolio of essential infrastructure assets, Brookfield’s business is about as defensive as they come. It is diversified both geographically and by industry, which significantly reduces risk. And because the assets in its portfolio provide critical services, Brookfield is one of the most resilient dividend stocks you can buy.
Furthermore, in addition to generating revenue that is largely unaffected by economic downturns, the majority of Brookfield’s sales are also indexed to inflation. Therefore, it’s the perfect defensive dividend stock that you can rely on to both protect your capital and generate attractive passive income.
However, what really makes Brookfield a no-brainer investment is that in addition to being one of the most reliable companies on the TSX, Brookfield also has plenty of growth potential and a long track record of executing its strategy.
In fact, management is constantly selling off more mature assets that can fetch a premium and recycling that cash into new opportunities. For example, recently, many of Brookfield’s investments have been in data centres as technology continues to improve and the AI boom creates significant demand for data.
Is Brookfield worth buying today?
Although Brookfield Infrastructure has seen its share price rally recently and is once again trading at its 52-week high, it still trades at a compelling valuation, especially if you’re looking to buy and hold the dividend stock forever.
For example, even at roughly $50 a share, Brookfield is still trading at a forward price-to-funds-from-operations (P/FFO) ratio of just 9.9 times. That’s still considerably lower than its five-year average forward P/FFO ratio of 11.9 times.
Furthermore, its current dividend yield of 4.9% is also higher than its five-year average yield of 4.6%. Plus, not only does Brookfield offer an attractive yield, it also aims to increase those distributions by 5% to 9% annually.
So, if you’re looking for a high-quality dividend stock to buy and hold forever, not only is Brookfield Infrastructure one of the best on the TSX, it’s also one of the few high-quality stocks trading at a reasonable valuation in this environment.
