If I could lock just one stock inside my Tax-Free Savings Account (TFSA) and never touch it again, it would be Brookfield Infrastructure Partners (TSX: BIP.UN).
Why? Because the TFSA is the ultimate compounding machine with stocks like BIP, which combines dependable income, global diversification, and long-term growth potential in a way not many Canadian stocks can match. When volatility hits, I don’t panic. I lean in.
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Volatility is a gift — if you know what you own
BIP isn’t your typical sleepy utility. While it operates essential infrastructure assets, its unit price can swing more than traditional regulated utilities. Since 2023, macroeconomic headwinds — rising interest rates, a short-seller report, and concerns over debt — have triggered several sell-offs.
But here’s the thing: income-focused infrastructure companies are rate-sensitive. Higher interest rates make yield stocks temporarily less attractive and increase borrowing costs. That doesn’t mean the underlying assets suddenly lose value.
Long term, BIP has rewarded patient investors. Over the past decade, it delivered a compound annual growth rate (CAGR) of about 8.5%. A $10,000 investment would have grown to roughly $22,650. By comparison, Harvest Equal Weight Global Utilities Income ETF posted a CAGR of about 5.7%, turning the same amount into about $17,360.
The lesson? Buying quality, particularly during fear, pays.
A global portfolio built to last
BIP owns critical infrastructure across four major segments: utilities, transport, midstream, and data. These include regulated transmission lines, rail networks, toll roads, energy transportation, storage, & processing assets, and data infrastructure. About 90% of its cash flow is regulated or contracted, meaning revenue visibility is high.
Geographically, roughly 68% of funds from operations (FFO) come from the Americas, 20% from Europe, and 12% from Asia Pacific. That global diversification reduces single-country risk while exposing investors to multiple growth markets.
Even better, infrastructure is riding powerful secular tailwinds:
- Digitalization: expanding data networks
- Decarbonization: grid upgrades and transition to cleaner energy
- Deglobalization: reshoring and logistics investment
BIP’s management team has a strong track record as active operators, not passive owners. Over 17 consecutive years, it has increased its cash distribution by at least 5% annually. Investors who bought a decade ago are now earning roughly a 10% yield on cost.
That’s the beauty of compounding inside a TFSA: every dollar of income is tax-free and re-investable.
Growth still ahead
Looking forward, BIP targets the following:
- Over 10% annual FFO per unit growth
- 5–9% annual distribution growth
- A sustainable payout ratio of 60–70%
- 12–15% internal rates of return on investments
In 2025, BIP delivered 6.4% FFO per unit growth and maintained a 66% payout ratio. Last month, it raised its distribution by 5.8%. At under $53 per unit at the time of writing, it trades at a fair valuation with a yield of around 4.7%.
For a long-term TFSA holding, that combination of yield plus growth is powerful, and I’d look to buy more units on market corrections.
Investor takeaway
If I had to choose just one stock to compound tax-free wealth inside a TFSA forever, Brookfield Infrastructure Partners would be it. Its globally diversified, essential assets generate stable cash flows, its management has proven capital allocation skills, and its consistent distribution growth fuels long-term compounding.
Yes, volatility comes with the name — but for disciplined investors, that volatility creates opportunity. In a TFSA, where every dollar of growth and income is sheltered from tax, BIP’s blend of income, resilience, and expansion potential makes it a forever stock worth holding through any market condition.
