A 4.7% TFSA Pick That Pays Consistent Cash

TFSA investors, Brookfield Infrastructure Partners is yielding almost 5% as it benefits from bullish trends in its areas of focus.

Karen Thomas, MSc, CFA

Karen is a stock market enthusiast focused on uncovering those stocks that she believes the market has mispriced. She does this through fundamental and quantitative analysis of companies and their industries, as well as a study of future opportunities and trends. She holds a Masters degree in Finance, the CFA designation, and has over 20 years of experience in the investment management industry. Having worked at a major pension fund, as well as two leading mutual fund firms as an analyst and portfolio manager, she has solid investing expertise which she aims to share with her readers.

Published July 15, 4:40 pm EDT

| More on: BIP.UN

Key Points

TFSA investors seeking high-yielding dividend stocks can benefit from tax-sheltered cash payments, making Brookfield Infrastructure Partners an ideal TFSA pick with its current 4.71% yield and diversified global portfolio of essential infrastructure assets.
Brookfield has paid dividends since 2009 with a 9% CAGR, backed by Q1 funds from operations up 10% to $709 million driven by strong performance across all segments, particularly data (up 46%) and midstream (up 12%), demonstrating the defensive and growing nature of the business.
Positioned to benefit from an "infrastructure investment super-cycle" driven by digitization, decarbonization, and deglobalization trends, Brookfield has record liquidity of $6 billion and access to Brookfield Asset Management for financing and partnerships, offering TFSA investors a compelling opportunity for reliable, growing quarterly cash payments.

Tax-free savings account (TFSA) investors are typically looking for high-yielding dividend stocks. Since their cash dividend payments are tax-sheltered, these dividend stocks make smart additions to any tax-free savings account. This is what makes them top TFSA picks.

Brookfield Infrastructure Partners L.P. (TSX:BIP.UN) is one of the largest owners and operators of global infrastructure networks. The business generates consistent and steady operating and financial results. And today, this top TFSA pick paying consistent cash is yielding a generous 4.7%.

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What is Brookfield Infrastructure Partners?

Brookfield Infrastructure owns and operates a globally diversified portfolio of high-quality infrastructure assets. This includes assets in numerous essential and critical infrastructure, such as utilities, transport, midstream, and data centre infrastructure. The assets that Brookfield has been focusing on are not only essential, but they’re also part of key secular trends driving the economy and society forward.

In other words, they have long-term staying power, they’re reliable, and they’re growing. This translates into steady and growing cash flows for Brookfield. And of course, steady and growing cash dividends for Brookfield’s shareholders.

Why is it a top TFSA pick?

In fact, Brookfield Infrastructure has paid out a dividend since 2009. This dividend has not only been reliable, but it has also been growing nicely. In this time period, the dividend has grown at a compound annual growth rate (CAGR) of almost 9%. And this is one of the reasons that Brookfield Infrastructure is a top TFSA pick – its reliable and growing dividend. In addition, investors have a chance to snatch up this gem while it’s yielding a very generous 4.7%.

It’s important to highlight that this yield is backed by a defensive, growing business. In Brookfield’s latest quarter, the company posted a 10% increase in funds from operations, to $709 million. This increase was driven by strong results in all of its businesses. The notable standouts were Brookfield’s data and midstream segments, which increased 46% and 12%, respectively.

Looking ahead

Brookfield’s infrastructure is concentrated on three core trends that are experiencing rapid, long-term growth – digitization, decarbonization, and deglobalization. As per Brookfield’s management, Brookfield is “benefitting from an infrastructure investment super-cycle that’s expanding in both scope and scale.”

In order to take advantage of this positive momentum, Brookfield is well-armed with a strong balance sheet and record liquidity of $6 billion. In addition to this, Brookfield Infrastructure is part of the larger Brookfield Companies group. This means that it has access to a leading asset management group, Brookfield Asset Management. This backing goes a long way in securing financing and partnerships, as well as origination opportunities.

The bottom line

As a top TFSA pick that pays consistent cash, Brookfield Infrastructure stock presents investors today with a good buying opportunity. It’s benefiting from an investment super-cycle, while yielding almost 5%, and it has record liquidity to take advantage of future growth opportunities.

TFSA investors looking for a solid dividend stock to buy should consider Brookfield Infrastructure stock for these reasons. BIP.UN stock can provide defensive and growing quarterly cash payments that benefit from exposure to some of the most lucrative and critical infrastructure in the world today.