Global Infrastructure Powerhouse Offers Unbeatable Value
For 15 years, Brookfield Infrastructure has consistently delivered impressive dividend growth, boasting a remarkable 9% compound annual rate. This outstanding performance has yielded a staggering 6.6x return for early investors. Today, this global infrastructure operator presents an extraordinary buying opportunity, trading at a historically low valuation multiple.
Historically, Brookfield Infrastructure has traded at around 16 times its adjusted funds from operations (FFO). However, its valuation has recently dropped to a mere 14.4x, making it an attractive option for income-focused investors. This discounted valuation is even more compelling when compared to other utility-like companies, offering a higher dividend yield (around 5%) and faster growth prospects (5%-9% annual target).
Brookfield Infrastructure’s success can be attributed to its strategic expansion into additional infrastructure platforms, capitalizing on three global megatrends: decarbonization, deglobalization, and digitalization. These catalysts have driven 15% compound annual FFO-per-share growth since its formation. The company’s asset rotation strategy has effectively pivoted its portfolio to capitalize on these trends, positioning it for continued growth.
The digitalization trend, in particular, has surpassed expectations, presenting a vast opportunity set for potential investments. Roughly 60% of the company’s business stands to benefit from this megatrend, as energy and data become increasingly interconnected. Brookfield’s diverse portfolio, including midstream infrastructure, utilities, and digital infrastructure, is well-positioned to capitalize on this trend.
With its growth prospects stronger than ever, Brookfield Infrastructure offers a rare combination of value and potential. Its historically low valuation multiple is unwarranted, making it an ideal time to invest or add to an existing position. As the company continues to grow its earnings and dividend at an above-average rate, investors can expect tremendous total returns in the coming years.
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