1 Reason I Will Never Sell Brookfield Infrastucture Stock
Alex Smith
3 weeks ago
Investing for the long haul is all about finding high-quality businesses that you can hold confidently, regardless of what the stock market or economy is doing. ThatâÂÂs why Brookfield Infrastructure Partners (TSX:BIP.UN) is a stock I plan to hold forever.
In fact, Brookfield Infrastructure isnâÂÂt just one of the best Canadian stocks you can buy; itâÂÂs the perfect template for what to look for when investing for the long haul.
ItâÂÂs well-established, highly diversified, defensive, reliable and grows rapidly, but more importantly, consistently.
The best stocks to buy are the ones that are so reliable and have such robust operations that you can buy them, forget about them, and let time do the work. TheyâÂÂre businesses you feel comfortable owning during bull markets, bear markets, recessions, and everything in between.
ThatâÂÂs how you find stocks to buy and hold for the long haul. In fact, one of Warren BuffettâÂÂs most famous quotes on investing says, âÂÂOur favourite holding period is forever.âÂÂ
Simply put, if you own a business that consistently grows cash flow, pays a reliable and growing dividend, and is run by a strong management team with a proven track record, whatâÂÂs the point of selling it unless the business, its industry, or its operations have fundamentally shifted?
ThatâÂÂs exactly how I view Brookfield Infrastructure. And thatâÂÂs the one reason I will never sell it. ItâÂÂs a stock I have more confidence in owning long term than almost anything else on the TSX.
Why Brookfield is one of the easiest stocks to have confidence in
The reason it is so easy to have confidence in Brookfield Infrastructure stock comes down to its portfolio of essential infrastructure assets diversified across the globe. They include utilities, energy infrastructure, transportation networks, and data-related assets that governments, businesses, and consumers rely on every single day.
No matter what the economy is doing, electricity still needs to flow, goods still need to move, and data still needs to be transmitted. That demand doesnâÂÂt disappear when markets get volatile, and it doesnâÂÂt slow down just because investors are nervous.
Furthermore, in addition to its diversified portfolio of essential assets spread out all over the world, roughly three-quarters of BrookfieldâÂÂs revenue is indexed to inflation.
That means Brookfield is one of the lowest-risk and most reliable stocks you can buy, which is paramount if you want to have confidence in owning a company for decades to come.
Long-term growth potential is as important as reliability
Having confidence to own a stock for the long haul isnâÂÂt just about managing risk and finding a company thatâÂÂs dependable. You also want to know that the business is consistently growing your hard-earned capital over time.
ThatâÂÂs another area where Brookfield Infrastructure stands out. The company generates strong and predictable cash flow from its portfolio of essential assets, which gives it the flexibility to both reward shareholders today and reinvest for future growth.
Brookfield has also proven time and time again that it knows how to execute its long-term growth strategy. Management consistently recycles capital out of mature assets and redeploys it into new opportunities with higher return potential.
On top of that, Brookfield continues to find new growth avenues as global infrastructure needs evolve. For example, data infrastructure, energy transition, and even the AI boom all require massive investment in power, connectivity, and transportation. These are exactly the kinds of assets Brookfield already owns and has decades of experience operating.
Furthermore, Brookfield Infrastructure stock targets and routinely meets its goal of earning investors 10% to 15% of annual returns over the long haul, with distribution growth in the range of 5% to 9% per year. Furthermore, on top of the consistent dividend growth, it offers a yield of roughly 5% today.
Therefore, when you consider how defensive and reliable Brookfield Infrastructure stock is, coupled with its attractive dividend and long-term capital gains potential, itâÂÂs not just one of the best Canadian stocks to buy; itâÂÂs one you might never sell.
The post 1 Reason I Will Never Sell Brookfield Infrastucture Stock appeared first on The Motley Fool Canada.
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More reading
- 1 TSX Stock to Safely Hold in Your RRSP for Decades
- Passive Income: How to Earn Safe Dividends With Just $20,000
- TFSA Season is Here: Canadian Stocks Worth Holding Tax-Free All Year
- 1 Smart Buy-and-Hold Canadian Stock
- 2 Ultra-Safe Dividend Stocks to Own for the Next 10 Years
Fool contributor Daniel Da Costa has positions in Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.
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