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Brookfield Infrastructure Corporation (NYSE:BIPC) will pay a dividend of $0.405 on the 31st of December. This makes the dividend yield about the same as the industry average at 3.8%.
See our latest analysis for Brookfield Infrastructure
Brookfield Infrastructure Might Find It Hard To Continue The Dividend
Solid dividend yields are great, but they only really help us if the payment is sustainable. While Brookfield Infrastructure is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. In general, cash flows are more important than the more traditional measures of profit so we feel pretty comfortable with the dividend at this level.
Over the next year, EPS could expand by 42.8% if recent trends continue. We like to see the company moving towards profitability, but this probably won't be enough for it to post positive net income this year. The positive free cash flows give us some comfort, however, that the dividend could continue to be sustained.
Brookfield Infrastructure Doesn't Have A Long Payment History
It is great to see that Brookfield Infrastructure has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 5 years was $1.29 in 2019, and the most recent fiscal year payment was $1.62. This implies that the company grew its distributions at a yearly rate of about 4.6% over that duration. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.
The Company Could Face Some Challenges Growing The Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Brookfield Infrastructure has grown earnings per share at 43% per year over the past five years. While the company is not yet turning a profit, it is growing at a good rate. If the company can turn a profit relatively soon, we can see this becoming a reliable income stock.
Our Thoughts On Brookfield Infrastructure's Dividend
In summary, while it's always good to see the dividend being raised, we don't think Brookfield Infrastructure's payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. This company is not in the top tier of income providing stocks.