Should You Buy This TSX Dividend Stock for its 5% Yield?

Income investors seeking reliable dividend growth in 2026 just received a compelling case study.

Brookfield Infrastructure Partners (TSX:BIP.UN) crushed expectations in its fourth quarter, delivering record funds from operations while simultaneously raising its distribution for the 17th consecutive year.

In Q4 2025, the infrastructure giant reported FFO (funds from operations) of US$0.87 per unit. It capped off a year where normalized FFO rose 10% amid foreign exchange headwinds and strategic asset sales.

BIP ended 2025 with a dividend payout ratio of 66%, allowing the board to raise the annual dividend by 6% to US$1.82 per share. Currently, the TSX dividend stock offers shareholders a 5% dividend yield in 2026.  

AI infrastructure drives explosive growth

Brookfield’s data segment reported FFO of US$502 million in 2025, an increase of 50% year over year. The company commissioned 220 megawatts at hyperscale data centres and signed 200 megawatts at U.S. retail facilities. With 2.3 gigawatts already contracted, Brookfield ended the year with 3.6 gigawatts of development potential.

BIP inked deals totalling 800 megawatts in Q4 with investment-grade customers under long-term contracts. Brookfield’s management has imposed strict guardrails while investing heavily to benefit from the artificial intelligence megatrend. It focuses on top-tier, workload-agnostic sites that support the full demand spectrum, which reduces single-theme exposure.

At U.S. core locations, Brookfield notched its 11th consecutive quarter of record bookings. An Illinois facility hit 100% occupancy, adding roughly US$45 million of annual EBITDA starting later this year.

Without additional equity, management took a 40-site portfolio acquired in January 2024 and grew combined EBITDA (earnings before interest, tax, depreciation, and amortization) from US$200 million to US$500 million on a contracted basis.

A strong balance sheet

Brookfield closed 2025 with US$6 billion in liquidity after recycling a record US$3.1 billion from asset sales.

Two transactions are already secured for 2026.

• The first sells Brazil’s largest electricity transmission concession, generating US$150 million at a 45% IRR (interest rate of return) and an 8 times multiple.
• The second forms a partnership around North American data centres, with proceeds funding the powered land bank buildout.

CEO Sam Pollock was clear: “The elevated pace of capital recycling will continue.”

Base business delivers steady results

While AI infrastructure grabs attention, Brookfield’s traditional businesses continue to generate predictable cash flow.

The utilities segment reported US$786 million in FFO for the year, up from US$760 million in the year-ago period. Transport delivered US$1.1 billion in FFO, while midstream posted US$668 million in FFO, up 7%, driven by higher volumes at Canadian natural gas operations.

CEO Sam Pollock framed the setup simply: “We have entered 2026 from a position of considerable strength.”

He pointed to three structural themes, digitalization, decarbonization, and deglobalization, driving an infrastructure investment super cycle. The AI buildout is expanding Brookfield’s opportunity set across data centres, power, and connectivity.

With stable interest rates and foreign exchange, management expects to achieve its 10% or higher per-unit growth target in 2026 and beyond. The backlog supports this confidence. Excluding Intel, roughly US$5.3 billion in projects will be commissioned over the next three years.

The verdict for dividend investors

Brookfield Infrastructure Partners offers a rare combination: a 5% yield backed by 17 years of consistent growth, exposure to the AI infrastructure buildout, and disciplined capital recycling at attractive returns.

The 66% payout ratio provides a cushion, while 10% normalized FFO growth gives management room to keep raising distributions while reinvesting in the business.

The post Should You Buy This TSX Dividend Stock for its 5% Yield? appeared first on The Motley Fool Canada.

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Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Infrastructure Partners and Intel. The Motley Fool has a disclosure policy.