Canadian infrastructure is officially booming.
According to ReNew Canada, the nation’s largest 100 infrastructure projects under construction are worth $343 billion, a $43 billion increase over last year.
To put that in perspective, the total value of Canada’s biggest infrastructure projects could buy you the world’s 960 most valuable super yachts. The year-over-year increase in the value of these projects ($43 billion) is equal to the market cap of eBay, one of the world’s biggest e-commerce companies.
The money being spent on Canadian infrastructure is going to telecom towers, data centres, roads and bridges. It promises to revitalize the nation’s economy and ramp up its investment universe. In this article, I’ll explore one stock that gives you considerable exposure to Canada’s budding infrastructure boom
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Brookfield Infrastructure Partners
Brookfield Infrastructure Partners (TSX: BIPC)(TSX: BIP.UN) is a Canadian company/partnership that invests in infrastructure all over the country and the world. The company’s infrastructure footprint is massive, consisting of several multi-billion-dollar assets:
- Triton International: The world’s largest owner/lessor of shipping containers.
- A network of global data centres such as Compass Datacentres and Data4.
- 175,000 telecom towers across India.
- Several pipelines, including Inter Pipeline and Colonial Pipeline.
- And more.
Brookfield’s is one of the biggest infrastructure portfolios owned by any company on the planet. And the company passes much of its portfolio income on to investors.
Since the topic of this article is “the Canadian infrastructure boom,” I should be clear that Brookfield Infrastructure Partners is an internationally diversified entity. It does not provide pure-play exposure to Canada. It does have a sizable percentage of its assets in Canada, though. More importantly, it is a 100% Canadian company that is making big moves in the world of global infrastructure. That alone is enough to justify Canadian investors getting interested. The question is, is BIP.UN actually a buy?
Income potential
One of the biggest things that Brookfield Infrastructure Partners has going for it is a lot of income potential. Like many real estate investment trusts, it passes a high percentage of its earnings on to shareholders. As a result, it has a high dividend yield.
BIP.UN pays a dividend of $0.64 per quarter. That is $2.48 per year. At today’s unit price of $50.18, therefore, BIP.UN has a 4.94% dividend yield. If you invest $100,000, you’ll get $4,940 back each year if the dividend doesn’t change.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Brookfield Infrastructure Partners | $50.18 | 1,993 | $0.62 per quarter ($2.48 per year) | $1,235.66 per quarter ($4.942.65 per year) | Quarterly |
Valuation
One reason to be optimistic about Brookfield Infrastructure Partners is the fact that its stock has a fairly modest valuation. At today’s price, the stock trades at just 0.73 times sales, 3.45 times book value and 2.82 times operating cash flow. These multiples are lower than average, indicating that BIP.UN stock is a comparatively attractive value today.
What’s on the horizon?
Brookfield Infrastructure Partners not only has a valuable, established business, but it also has a lot of big projects coming up on the horizon that it can use to finance future growth. The company is actively buying up data centres to capitalize on the AI revolution, and recently completed a $9 billion pipeline deal. These deals, if successful, will provide considerable value to BIP.UN shareholders in the future.
Foolish takeaway
Canadian infrastructure is booming. And nobody has a bigger slice of the pie than Brookfield Renewable Partners. Well-financed, growing and lucrative, the company has the ability to acquire and effectively monetize much of Canada’s infrastructure in the decades ahead.
