Investing in Infrastructure

Brookfield Infrastructure Partners, L.P. (NYSE: BIP) is a master limited partnership (meaning it’s treated differently, tax-wise, than most public companies), owning and operating critically important infrastructure assets that provide water, energy, data and transportation to millions of people around the world. The company’s funds from operations have been growing, rising 14 percent from 2016 to 2017. Much of its cash flow stems from long-term contracts — in many cases in markets where it operates as a regional monopoly. Unlike many other companies that prosper or falter along with the economy, Brookfield Infrastructure is much less vulnerable to the economic environment. After all, people may put off buying a new car in a recession, but they’ll keep paying for water and energy. Brookfield plans to increase its payout between 5 percent and 9 percent each year as it steadily expands its portfolio. In 2017, it invested $2.7 billion in new assets and ended the year with $3 billion in available funds to continue its growth. Infrastructure growth is a massive global need. Between 2014 and 2045, the global urban population is expected to increase by more than 2 billion people, who will need access to energy, water, data and transportation. A recent pullback in Brookfield’s share price resulting in a hefty dividend yield near 4.6 percent presents a nice opportunity for income-seeking long-term investors. (The Motley Fool has recommended Brookfield.)