The landscape of smart investing is constantly evolving, yet some opportunities stand the test of time. A stellar example is Brookfield Infrastructure, a company deeply embedded in the realms of dividends and infrastructure growth. Over the past 15 years, it has not only consistently increased its payouts but also delivered a remarkable 6.6x return on investment for early shareholders. If the idea of having invested at its inception excites you, the opportunity to capitalize may not be entirely out of reach.
Brookfield Infrastructure is currently trading at a valuation historically lower than its norm, offering a potential avenue for investors looking to tap into sustainable and lucrative returns. Traditionally, it traded around 15.5 times its funds from operations (FFO) upon going public. Over the past decade, that multiple has averaged around 16, occasionally tipping higher in the last five years. However, the current scenario paints a different picture.
Rising interest rates have shifted focus towards traditional income-generating avenues like government bonds. This transition has inadvertently lowered the appeal of high-dividend-paying entities, impacting companies like Brookfield, whose valuation now stands at a low 14.4 times its FFO. This shift offers a strategically advantageous moment for income-focused investors.
Yet, there's more to the story than just numbers. The company's foresight into mega-trends like decarbonization, deglobalization, and digitalization positions it well for future growth. Brookfield's strategy of aligning its assets to these trends is already reflecting in their projections: a brisk 15% compound annual growth in FFO per share since inception. Moreover, the advent of AI has further stretched the horizon of possibilities, requiring massive infrastructure investments that Beckfield is poised to supply.
What truly elevates Brookfield as an investment option is its extensive reach into digitalization. This segment now informs 60% of its operations—from providing the necessary gas supply to powering burgeoning data centers, to owning and developing essential digital infrastructure. This interconnected approach secures its foothold in an era where energy and data are interdependent.
In conclusion, Brookfield Infrastructure's current valuation offers a rare window of opportunity. The powerful tailwinds of underlying trends promise not only sustained dividend growth but also a revaluation potential that could enhance future returns. This makes it a compelling choice for those looking to reap the benefits of a high-yielding, well-strategized portfolio.
