The Company in a Nutshell
- BIP is a mixed bag of various utility businesses; it’s almost a utility ETF!
- BIP can count on projects worldwide with rock-solid contracts that perpetuate its growth.
- BIP is one of the largest owners and operators of critical infrastructure networks.
| Date Reviewed | 11/15/2024 |
| Company Name | Brookfield Infrastructure Corp |
| Symbol | BIPC |
| Sector | Utilities |
| Industry | Utilities - Regulated Gas |
| Beta | 1.468 |
| PRO Rating | 4 |
| Dividend Safety | 4 |
Business Model
Brookfield Infrastructure Corporation is a global infrastructure company. The Company owns and operates assets in the utilities, transport, midstream and data sectors across North and South America, Asia Pacific, and Europe. It owns interests in a regulated gas and electricity business in the United Kingdom, a regulated natural gas transmission business in Brazil and a global intermodal logistics operation. Its regulated gas transmission operation in Brazil operates approximately 2,000 kilometers of natural gas transportation pipelines in the states of Rio de Janeiro, Sao Paulo, and Minas Gerais. Its regulated distribution operation is the independent last-mile, multi-utility connection provider, with approximately 4.5 million connections. The Company’s global intermodal logistics operation is the world’s largest lessor of intermodal containers with a fleet of over four million containers representing seven million twenty-foot equivalent units (TEUs).
| Current price | 37.72 |
| ROE | 0.00 % |
| ROIC | 9.35 % |
| Shareholder Yield | 2.40 % |
| 5-Yr Total Return | 99.90 % |
| 1-Yr Total Return | 10.00 % |
| Next Earnings Date | 01-30-25 |
Latest Quarter Information
What the CEO said:
"Brookfield Infrastructure continues to deliver solid results while achieving its strategic objectives, including successfully reaching our $2 billion capital recycling target for the year,” said Sam Pollock, Chief Executive Officer of Brookfield Infrastructure Partners. “With interest rates coming down, we are in a new market environment with increased deal flow, creating a significant investment pipeline that is also benefiting from growth in sectors related to AI and associated energy demands.”
What we say:11-11-2024, Brookfield Infrastructure reported a good quarter with Funds from operations up by 7% and FFO per share up by 4%. Revenue growth was primarily driven by inflationary rate increases across their utilities and transport assets, higher revenues in midstream operations, and contributions from recent acquisitions, including a global intermodal logistics operation and three data center platform investments. Utilities was up 9% on a comparable basis (it sold an Australian regulated utility business), Transport + 50% on acquisition, Midstream -10% on the sale of a gas pipeline and higher interest charges, Data center +29% on new investments and acquisitions.
Investment Thesis
BIP has built an impressive infrastructure portfolio through various business segments: Utilities (27% of FFO) include gas pipelines, electricity distribution and transmission lines, and smart meters. Transport (42%) includes railroads, terminals (ports), and toll roads. Midstream (21%) includes transmission pipelines, natural gas storage, processing plants, and polypropylene production capacity. Finally, Data (10%) comprises telecom towers, fiber optic cables, and 50+ data centers. An investor will purchase a mixed bag of utility types when purchasing BIP shares. Brookfield has ample liquidity and no significant debt maturities in the next five years; it is also backed by Brookfield Corporation (BN). This is a “go-to” stock for an investor looking for income. The company offers a stable business model based on predictable cash flows with inflation-indexed contracts, which is how BIP can report stable growth, even in challenging times.
Brookfield is known to recycle its assets. This is a strategy where a company buy assets, improves its profitability and sells them at a higher price to “recycle” this money into another undervalued asset to keep the flywheel spinning. Management has shown strong expertise in executing this strategy, which has been successful for several years.
An investor now has the option to trade BIP either as a limited partner or a corporate shareholder; please look to your accountant to assist you in holding this stock.
Dividend Triangle
| 5-Yr Rev. Growth | 9.90 % |
| 5-Yr EPS Growth | -21.90 % |
| 5-Yr Div Growth | 0.00 % |
Potential Risks
BIP requires billions to finance its projects. The company now has a total long-term debt of over USD $52B, up from $10B in 2018. BIP is a capital-intensive business that requires a lot of debt to finance its projects. The company continues to exhibit interest in new projects requiring more financing. This could eventually pose a problem as interest rates increase quickly. Another source of concern is their diversification. We could argue that diversification is positive, but BIP manages various business types, and there are few similarities between data centers and railroads. We wonder: could BIP lose itself in this maze of disparate ventures? Finally, BIP’s financial structure makes it very difficult to analyze. There are blind spots as we can’t review each business operated by the company. Since it isn’t a GAAP metric, we must also trust management in their FFO calculation. A short report highlighted those flaws in the fall of 2023, but the company hasn’t fallen since.
In October 2024, the company announced another share restructuring operation without giving much information. We are still waiting to see the impact of its new restructuration.
| Debt/Equity | 0.00 |
| Financial Debt to EBITDA (TTM) | 4.50 |
| Current Ratio (Quarterly) | 0.45 |
| Credit Score | 5 |
Dividend Growth Perspective
Brookfield has exhibited a strong dividend history over the past decade. Management is confident it will maintain a 5-9% distribution increase policy in the coming years. We also appreciate their FFO payout ratio target of 60-70%, leaving lots of room for business growth on top of dividend growth. If we analyze the company’s cash payout ratios, we won’t understand how this is possible. We must look at BIP’s latest quarter press release because it features calculations for funds from operations per unit (FFO per unit). For the full year of 2023, the FFO per unit was at $2.95. The utility company announced a 6% increase to $0.405/share in 2024.
| Dividend ($) | 1.62 |
| Dividend Yield Fwd | 4.45 % |
| Dividend Frequency | Quarterly |
| Average 5-Yr Yield | 3.45 % |
| Payout Ratio (%) | 181.75 |
| Cash Payout Ratio (%) | 0.00 |
| DGR 1-Yr | 5.90 |
| DGR 3-Yr | 16.40 |
| DGR 5-Yr | 0.00 |
| DGR Streak | |
| Chowder Score | 0.00 |
| Next DVD PMT | 12-31-24 |
Valuation
| Recent Annual Dividend Payment | $ 1.62 |
| Expected Dividend Growth Rate Years 1-10 | 5.00% |
| Expected Terminal Dividend Growth Rate | 5.00% |
| Discount Rate | 10.00% |
| Discount Rate (Horizontal) | |||
| Margin of Safety | 9.00% | 10.00% | 11.00% |
| 20% Premium | $ 51.03 | $ 40.82 | $ 34.02 |
| 10% Premium | $ 46.78 | $ 37.42 | $ 31.19 |
| Intrinsic Value | $ 42.53 | $ 34.02 | $ 28.35 |
| 10% Discount | $ 38.27 | $ 30.62 | $ 25.52 |
| 20% Discount | $ 34.02 | $ 27.22 | $ 22.68 |
| Market Cap | 5 B |
| PE Ratio | 0.00 |
| Fwd PE | 0.00 |
| Price to Book Ratio | -6.30 |
| DDM Valuation | 34.02 |
| Average 5-Yr PE | 172.56 |
| Value Score | 81 |
- All financial metrics are updated weekly.
- The DSR PRO rating and Dividend Safety Score are updated quarterly.
- The analysis (investment thesis, risk potential, dividend growth perspective and DDM calculation) is reviewed every 6 months.
- The PDF format includes only comments (no metrics) and is reviewed every 6 months.