Brookfield Infrastructure Is Up 9% After Earnings: What Investors Need to Know

A large-cap stock with a low-risk and strong revenue profile is an investment opportunity for income, growth, or both.

| More on:

Key Points

One quarterly earnings report in a year can make or break a stock. It’s been half a month since Brookfield Infrastructure Partners (TSX:BIP.UN) presented its Q1 2024 results, and from May 1, the utility stock has risen 9% to $41.39.

Many market analysts see this owner and operator of critical global infrastructure networks as an investment opportunity for income, growth, or both. But did the financial results and business outlook impress existing investors and help win new ones?

The $19.5 billion company is a subsidiary and the infrastructure services arm of Brookfield Asset Management, one of the world’s largest alternative investment management firms. In addition to the potential capital gain, the large-cap stock pays a hefty 5.45% dividend.

Business performance

Brookfield Infrastructure takes pride in its infrastructure businesses in various sectors and geographies. The four segments – utilities, transport, midstream, and data – collectively provide stable cash flows and have strong growth prospects.

According to its CEO, Sam Pollock, the business is the strongest it has ever been, owing to the curved revenue profile and sector tailwinds that drive organic growth. He adds that the business performed well, notwithstanding higher interest rates.

In the three months ended March 31, 2024, net income soared 469.2% year over year to US$814 million, while cash from operations climbed 62.7% to US$841 million versus Q1 2023. The transport segment contributed the most significant year-over-year increase in funds flow from operations (57% to US$302 million).

Brookfield Infrastructure acquired Triton International Limited, the world’s largest lessor of intermodal freight containers, in September 2023. The acquisition delivered and increased transport operations by 10%. The submetering business (utilities) is expanding in the U.S., while the natural gas gathering and processing operation (midstream) added incremental processing capacity and is expanding.

Management anticipates significant activity across the global data centre platform from major hyper-scale customers and following strategic acquisitions. Brookfield Infrastructure acquired a German telecom tower operation, two hyperscale data centre platforms, and 40 retail colocation sites.

Business outlook

Pollock believes that the strong business performance and management’s strategic outlook outweigh all factors related to the near-term interest rate environment. He expects interest rates to stabilize over the long term. He said the global footprint is a competitive advantage. It allows the company to transact or make deals in varying economic conditions.

Furthermore, Brookfield Infrastructure’s long-term outlook for the global economy remains positive. However, some quarters will have higher volatility due to geopolitical risks and low-interest rate returns. Pollock also notes that infrastructure assets attract institutional investors because they provide stability to their investment portfolios.

A buy-and-hold stock

Brookfield Infrastructure maintains a low-risk profile and tremendous resiliency, as approximately 90% of cash flows are regulated, contracted, and inflation-protected. The company has been paying dividends for 61 quarters (since Q1 2008) and targets a distribution growth between 5% and 9% annually.

The 9% stock price increase in 15 days is modest, if not on the low side. If the business did well in the high-interest rate environment, imagine the financial results once the monetary policy eases. Brookfield Infrastructure is the top buy-and-hold stock in May 2024.  

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management and Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

More on Energy Stocks

Nuclear power station cooling tower
Energy Stocks

5 Reasons to Buy Cameco Stock Like There’s No Tomorrow

Cameco stock looks like it could remain a major winner in the near and distant future as the world goes…

Read more »

oil and natural gas
Energy Stocks

The Best Energy Stock to Invest $200 in Right Now

This energy stock isn't going anywhere anytime soon, which is what makes it such a solid investment, especially for dividend…

Read more »

oil pump jack under night sky
Energy Stocks

What to Know About Canadian Energy Stocks for 2025

There is a lot to consider among energy stocks heading into 2025, so let's look at some considerations and stocks…

Read more »

oil pump jack under night sky
Energy Stocks

The Best Energy Stock to Invest $2,000 in Right Now

TerraVest Industries is an undervalued TSX stock that trades at a discount to consensus price target estimates.

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Canadian Oil and Gas Stocks to Watch for 2025

After outperforming the broader market in 2024, these two top Canadian oil and gas stocks could continue soaring in 2025…

Read more »

golden sunset in crude oil refinery with pipeline system
Energy Stocks

TFSA Investors: Is Enbridge Stock a Buy?

Enbridge is off the recent high. Should you buy now for the dividend yield?

Read more »

oil and natural gas
Energy Stocks

Dividend Investors: Top Canadian Energy Stocks for December

These energy companies have increased their dividends for over 20 years and offer compelling yield near the current market price.

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Better Energy Stock: Canadian Natural Resources vs. Suncor

Canadian Natural Resources and Suncor are off their 2024 highs. Is one stock now oversold?

Read more »