Are You Looking for a High-Growth Dividend Stock?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Brookfield Infrastructure Partners in Focus
Based in Hamilton, Brookfield Infrastructure Partners (BIP) is in the Finance sector, and so far this year, shares have seen a price change of -16.17%. The operator of utility, transportation and energy assets is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 5.89% compared to the REIT and Equity Trust - Other industry's yield of 5.11% and the S&P 500's yield of 1.71%.
In terms of dividend growth, the company's current annualized dividend of $1.53 is up 6.3% from last year. Brookfield Infrastructure Partners has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 3.35%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Brookfield Infrastructure's payout ratio is 54%, which means it paid out 54% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BIP for this fiscal year. The Zacks Consensus Estimate for 2023 is $3.04 per share, representing a year-over-year earnings growth rate of 12.18%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, BIP is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Brookfield Infrastructure Partners LP (BIP) : Free Stock Analysis Report
