The Canadian stock market offers plenty of opportunities for investors looking for wealth growth. The best TSX stocks distribute regular shareholder dividends, while delivering returns through capital gains. Companies with solid business models and industry tailwinds to boost them are the likeliest to offer juicy dividends, consistently deliver growth through capital gains, and support dividend hikes.
The TSX offers several high-quality dividend stocks you can invest in for this purpose. Today, we will look at one such stock you can consider adding to your portfolio for long-term wealth growth through capital gains and dividend income.
Brookfield Infrastructure Partners
Brookfield Infrastructure Partners (TSX:BIP.UN) is a US$15.54 billion market capitalization stock offering you the world. One of the most diversified publicly traded companies on the TSX, Brookfield Infrastructure Partners offers investors exposure to several sectors of the economy.
From telecommunications to energy, infrastructure, and transport, you can liken the stock to a one-ticket fund diversifying your capital across several industries.
As of this writing, Brookfield Infrastructure Partners stock trades for $45.75 per share, offering its investors $1.53 in dividends per share. BIP.UN stock distributes the payouts at a quarterly schedule to its investors. Between September 2009 and April 2023, it delivered 534.54% in returns through capital gains alone.
After accounting for dividends, the total returns are over 1,000%. While it’s not a typical growth stock delivering substantial returns rapidly, Brookfield Infrastructure Partners has created plenty of shareholder value over the years.
Rising through its challenges
2022 was not a good year for stocks across the board. BIP.UN stock also faced a challenging year in 2022 but has continued generating predictable cash flows that keep growing. In the last year, BIP.UN stock saw an uptick of 20% in its funds from operations, with its fund flows per unit growing by 12% to hit US$2.71.
The company’s management defined a target for its organic growth between 6% and 9% for 2022. It managed to grow by 10% in 2022, surpassing its guideline. Regardless of the challenges that 2022 presented, the essential nature of BIP.UN stock’s cash-generating assets allowed it to continue growing.
Unlike many other companies, Brookfield Infrastructure Partners enjoys a degree of protection from the impact of interest rate hikes. While it has a significant debt load, Brookfield Infrastructure’s debt comes with a fixed rate. Between its fixed-rate debt and cash flows index to inflation, it appears well-positioned to continue growing investor value.
Brookfield Infrastructure Partners ended 2022 carrying a US$4 billion backlog, inspiring confidence in investors through revenue visibility. The next 12 months might see the company drive its top line higher with a combination of acquisition-based and organic growth.
|COMPANY||RECENT PRICE||NUMBER OF SHARES||DIVIDEND PAYOUT PER SHARE||TOTAL PAYOUT||DISTRIBUTION FREQUENCY|
|Brookfield Infrastructure Partners||$45.75||575||$0.5225||$300.43||Quarterly|
The company ended 2022 with US$3.5 billion in liquidity, and it has deals in progress that can generate in approximately US$260 million in net proceeds within the first two quarters of 2023. While the stock trades over 18% below its all-time high, analysts are confident its shares can soar by 30% in the next 12 months.
Investing in 575 shares of BIP.UN stock could earn generate around $300 in dividend income every quarter, translating to $1,200 per year in annualized dividend income.