Why You Might Be Interested In Brookfield Infrastructure Corporation (NYSE:BIPC) For Its Upcoming Dividend
Brookfield Infrastructure Corporation (NYSE:BIPC) stock is about to trade ex-dividend in four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Brookfield Infrastructure's shares before the 30th of May in order to be eligible for the dividend, which will be paid on the 30th of June.
The company's upcoming dividend is US$0.38 a share, following on from the last 12 months, when the company distributed a total of US$1.53 per share to shareholders. Last year's total dividend payments show that Brookfield Infrastructure has a trailing yield of 3.3% on the current share price of $45.97. If you buy this business for its dividend, you should have an idea of whether Brookfield Infrastructure's dividend is reliable and sustainable. As a result, readers should always check whether Brookfield Infrastructure has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Brookfield Infrastructure
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Brookfield Infrastructure has a low and conservative payout ratio of just 14% of its income after tax.
Click here to see how much of its profit Brookfield Infrastructure paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Brookfield Infrastructure's earnings have been skyrocketing, up 414% per annum for the past three years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, Brookfield Infrastructure looks like a promising growth company.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, three years ago, Brookfield Infrastructure has lifted its dividend by approximately 5.8% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
The Bottom Line
Is Brookfield Infrastructure an attractive dividend stock, or better left on the shelf? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Brookfield Infrastructure ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
While it's tempting to invest in Brookfield Infrastructure for the dividends alone, you should always be mindful of the risks involved. For instance, we've identified 4 warning signs for Brookfield Infrastructure (2 are significant) you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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