Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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
Headquartered in Hamilton, Brookfield Infrastructure Partners (BIP) is a Finance stock that has seen a price change of 1.58% so far this year. Currently paying a dividend of $0.36 per share, the company has a dividend yield of 3.5%. In comparison, the REIT and Equity Trust - Other industry's yield is 3.9%, while the S&P 500's yield is 1.69%.
Looking at dividend growth, the company's current annualized dividend of $1.44 is up 5.9% from last year. Over the last 5 years, Brookfield Infrastructure Partners has increased its dividend 4 times on a year-over-year basis for an average annual increase of 3.44%. 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. Brookfield Infrastructure's current payout ratio is 56%. This means it paid out 56% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BIP for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.69 per share, with earnings expected to increase 10.70% from the year ago period.
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 have to be mindful 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
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