Brookfield Infrastructure Partners L.P. (TSX:BIP.UN) has long been a popular pick for income-seeking investors, and 2024 has proven to be another year of stable performance. With its strong track record and global infrastructure portfolio, is this stock still a solid choice for your portfolio in 2025? Let’s take a closer look.
A solid year but underperformed the market
Brookfield Infrastructure Partners delivered a respectable 15% return in 2024, outpacing the broader utilities sector’s 13% gain (using the iShares S&P/TSX Capped Utilities Index ETF as a benchmark). However, when compared to the broader Canadian market, represented by the iShares S&P/TSX 60 Index ETF, which surged nearly 21%, the stock’s performance seems slightly underwhelming.
Despite this, Brookfield has demonstrated remarkable long-term growth. Over the past decade, its stock has generated an impressive 244% total return, outpacing the utility sector’s 90% and the Canadian stock market’s 135% returns.
A dividend champion with consistent growth
One of the key reasons investors flock to Brookfield Infrastructure is its dependable dividend growth. The company has raised its cash distribution annually for about 15 consecutive years, offering a steady income stream for long-term investors. Its dividend growth rates over the last one, three, five, and ten years range between 6–8%, which is the kind of income growth investors can expect.
With a diversified global portfolio of essential infrastructure assets – spanning utilities, transportation, midstream, and data – Brookfield Infrastructure Partners benefits from stable cash flows. These assets are largely supported by contracts and regulated rates, which offer resilience in fluctuating economic conditions. Moreover, long-term trends like digitalization and decarbonization provide significant tailwinds for future growth.
Growth potential amid stable cash flows
Brookfield Infrastructure Partners aims for a long-term return of 12–15%, and it’s clear that management is focused on achieving this through smart acquisitions and strategic asset enhancements. The company targets funds from operations (FFO) growth of at least 10%, with an annual cash distribution increase of 5–9%. Its sustainable FFO payout ratio has averaged 70% over the past decade, with 2024’s ratio sitting comfortably at 67%.
In 2024, the company saw a 7.9% increase in its FFO, reaching US$2.5 billion, while per-unit growth was 5.8%, reaching US$3.12. The fact that these results were below expectations may be why the stock currently trades at a discount.
Is Brookfield Infrastructure Partners L.P. a buy?
At its current price of $47.40 per unit, Brookfield Infrastructure offers a 5.1% cash distribution yield, which is significantly higher than the roughly 3.7% yield on a one-year guaranteed investment certificate (GIC). For income-focused investors, this yield alone makes it an attractive option. Additionally, analysts believe the stock has the potential for a 21% upside over the next 12 months, offering both income and growth potential.
However, investors should keep in mind that, like all stocks, Brookfield Infrastructure carries some volatility and risk. If you’re considering adding this stock to your portfolio, ensure you have a long-term investment horizon and are prepared for market fluctuations.
The Foolish investor takeaway
Brookfield Infrastructure Partners is a solid income investment with a history of steady cash distribution growth and long-term capital appreciation. While it might not be outperforming the broader market at the moment, its strong fundamentals, global diversification, and commitment to growth make it a good consideration for investors seeking stability and reliable income.
