The 1 Stock I’d Buy Right Now

Want quality, good value, stable returns, and dividends in one stock? Take a closer look at this best-in-class utility now.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Capital is scarce. If there’s only one stock I’d buy right now, it’d have all the good traits below.

First, the business has to be of high quality. After all, Warren Buffett, one of the best investors of all time, advocates buying a wonderful business at a fair price over a fair business at a wonderful price.

Second, the stock should be in a long-term upward trend.

Third, it must offer periodic returns with stable dividends.

Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) has all three traits.

Sleep well at night with Brookfield Infrastructure

Brookfield Infrastructure is a high-quality business. It is a big player in global critical infrastructure networks. Additionally, it has the expertise to actively manage operations and opportunistically sell assets to reinvest capital into the business.

The incredible management and a stronger U.S. dollar have led the TSX shares to generate annualized returns of nearly 20% since its inception in 2009. This is despite the recent market selloff!

Thanks to the company’s strategy of maintaining high levels of liquidity at all times, financing its assets with long-duration, fixed-rate debt, and investing in quality, well-contracted assets, it can defend against this economic downturn.

The COVID-19 pandemic greatly impacts many parts of the economy. However, all of BIP’s businesses are essential services that have operated through the pandemic.

Additionally, the stock remains in a long-term upward trend. This indicates that the business has staying power, and the market gives it a stamp of approval.

BIP owns a diversified portfolio of assets across four key sectors. In the first quarter, the company managed to keep its funds from operations (FFO) per share steady. It declined by only 2% year over year.

Virus disruptions have had little impact on its utility, data, and energy assets, which contribute about 72% of its FFO. In the current environment, its transportation infrastructure assets (i.e., rail, toll roads, and ports) will get a bigger hit.

Safe dividends

The company has a strong culture of paying increasing dividends. BIP’s cash distribution has increased every year since its inception by 10.6% per year. That’s above-average growth for a utility.

Most of BIP’s FFO remains intact. Importantly, the company has the financial position and willingness to maintain its cash distribution and increase it by 5-9% per year in the future. At writing, BIP offers a 4.6% yield. That’s an above-average yield compared to the iShares S&P/TSX Capped Utilities Index ETF that yields about 3.5%.

Creating value; Good valuation

During this stressful period, amazingly, BIP has the liquidity to continue buying high-quality assets at attractive valuations. In Q1, it reported closing a large-scale transaction of 130,000 Indian telecom towers for which BIP will invest up to US$500 million alongside its institutional partners.

In the near term, it also plans to invest an additional US$700 million in acquisitions. Buying quality assets in stressful times is the kind of action that drives long-term shareholder returns.

BIP is a wonderful business trading at a fair price. Investors interested in a quality utility stock should buy some now and prepare to buy more should the stock dip due to a second wave of COVID-19 infections.

The Foolish takeaway

Investors can buy wonderful Brookfield Infrastructure for a juicy yield and above-average growth at a fair price. If the stock dips on market selloffs, back up the truck!

Should you invest $1,000 in Brookfield Infrastructure Partners right now?

Before you buy stock in Brookfield Infrastructure Partners, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Brookfield Infrastructure Partners wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,058.57!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 38 percentage points since 2013*.

See the Top Stocks * Returns as of 2/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Kay Ng owns shares of Brookfield Infrastructure Partners. The Motley Fool recommends BROOKFIELD INFRA PARTNERS LP UNITS and Brookfield Infrastructure Partners.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

3 colorful arrows racing straight up on a black background.
Dividend Stocks

These Are the Highest-Yielding Stocks on the TSX Right Now 

Let’s look at some of the highest-yielding stocks on the TSX right now and see how you can make the…

Read more »

rail train
Dividend Stocks

Canadian National Railway: Buy, Sell, or Hold in 2025?

CN is down more than 20% in the past year. Is CNR stock now oversold?

Read more »

Canadian Red maple leaves seamless wallpaper pattern
Dividend Stocks

5 Stocks for Canadian Dividend Investors

Given their solid underlying businesses, reliable cash flows, and healthy growth prospects, these five Canadian stocks are excellent buys.

Read more »

Woman in private jet airplane
Dividend Stocks

2 Bargain Stocks to Buy While They’re Still Cheap

Long-term investors looking for bargains should take a closer look at these two solid dividend stocks.

Read more »

analyze data
Dividend Stocks

Take Full Advantage of Your TFSA With These 5 Dividend Stars

These TSX stocks pay good dividends that should continue to grow.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA: Invest $25,000 in This TSX Stock for $1,966 in Annual Passive Income

Whitecap Resources is a TSX dividend stock that offers you a tasty dividend yield in 2025, making it attractive to…

Read more »

investor looks at volatility chart
Dividend Stocks

Sell-Off Survivor: Why This Canadian Stock Is a Must-Own in Volatile Times

There are few sectors that offer the security as well as growth as infrastructure, and this global powerhouse is a…

Read more »

A child pretends to blast off into space.
Dividend Stocks

Trump Tariffs: 1 TSX Stock That Could Take a Huge Hit

Cargoget (TSX:CJT) is vulnerable to Trump tariffs due to extensive involvement in cross-border trade.

Read more »