3 Infrastructure Stocks to Buy Before the Market Recovers
The stock market goes up and the stock market goes down, but people aren't going to stop buying electricity, using water and natural gas, surfing the internet, or driving their car. And the companies that own the infrastructure that supports all of that will keep collecting the small but regular "tolls" assessed for the use of their assets. It doesn't matter too much what's happening on Wall Street; they are still going to get paid. That's why investors might want to look at the infrastructure space while Wall Street is broadly downbeat during this bear market. Here are three options to consider, each of which is offering a generous yield.
Diversification is good for your portfolio, and it can be good for a company's portfolio, too, especially if the goal is to create a collection of infrastructure assets. Brookfield Infrastructure Partners (NYSE: BIP), for example, spreads its bets across the globe, with 44% of its funds from operations (FFO) coming from North America, 19% from South America, 18% from Europe, and 19% from Asia. This way the economic ups and down of any one region won't play too much havoc with performance. On the business front, it owns utility, transportation, midstream, and data assets (towers, data centers, and fiber optic cables). All of these are generally reliable businesses and give the company more options when buying and selling assets. And any single asset won't have an undue influence should it experience difficulty. Essentially, Brookfield Infrastructure is a one-stop shop for infrastructure.
Shares yield around 3.8% today and are backed by a distribution that has been increased annually since 2008, adjusted for a special distribution in 2020 (the partnership created a traditional corporate share class for those that can't own partnerships, with shares in the entity distributed to then-current unitholders). The distribution has grown at a compound annual rate of 10% since 2009, which is pretty impressive for any company, let alone one that owns boring infrastructure assets. Funds from operations over that span increased by a hefty 15% a year. This infrastructure player has clearly proven it can provide broad exposure and strong growth at the same time, making it a solid option for anyone looking at the space. The best part: Despite the company's consistency, the stock has fallen around 17% from its recent highs thanks to the bear market.
Source Fool.com
