This Dividend Giant Is Approaching Its Prime

When you're in your prime, nothing can stand in your way.

Now that Brookfield Infrastructure Partners (NYSE: BIP  ) has moved to acquire the remaining outstanding shares of Australia's Prime Infrastructure -- in a deal valued at about $1.4 billion -- I submit that this generous dividend payer is poised to become an unstoppable engine of long-term cash flow.

Nearly two years ago, I made a wish. Given my forecast for deep and sustained weakness in housing and construction, I wanted to see Brookfield Infrastructure Partners (let's call it "BIP") diversify away from its timberland-heavy asset portfolio with a move into transportation and utility plays. I sought to steer Fools clear of heavily exposed timberland operators like Weyerhaeuser (NYSE: WY  ) , and I issued repeated warnings about building material producers USG (NYSE: USG  ) and Cemex (NYSE: CX  ) . For this Fool, BIP's pending move to consolidate ownership of a diverse global asset portfolio is proof that wishes do come true.

Unlike the Los Angeles school district that managed to spend nearly $1.2 billion building only three public schools, let's take a look at what BIP will be getting for its $1.4 billion investment. BIP will become the proud owner of the Dalrymple Bay Coal Terminal in Queensland, Australia. As Peabody Energy (NYSE: BTU  ) noted in a recent earnings report, this strategic coal export facility is already operating at record volumes following a capacity expansion to 85 million tonnes per year. I view Australian coal exports as one of the premier long-term growth industries in the world today, and therefore I consider BIP's ownership of this facility a prime driver of reliable income.

Although I consider the coal terminal the star of BIP's acquired portfolio, we have quite a supporting cast to recognize. Prime holds a 26.4% stake in Kinder Morgan Energy Partners' (NYSE: KMP  ) NGPL natural gas pipeline, which spans more than 15,000 kilometers. Transportation plays include an extensive rail network in Western Australia, and a majority interest in seven port facilities located throughout Europe. Energy utilities in places like New Zealand and the U.K. round out a first-rate, well-diversified portfolio.

Brookfield Asset Management (NYSE: BAM  ) , which created BIP as a spin-off in 2008 and played an instrumental role in facilitating these deals, will end up holding a 28% to 39% stake in BIP.

BIP boasts that this latest deal will be immediately accretive with a 27% boost to funds from operations. The company also pledged a 13% dividend hike for 2011 to $1.24 per unit, and stated its intention to increase payouts by 3% to 7% per year over the long term. Given the highly predictable nature of cash flow from most of BIP's core assets, I believe Fools can expect the company to make good on those intentions.

For Fools seeking resilient plays to ride out this extended period of economic uncertainty, I consider BIP a superior combination of deep value and reliable income. I have reinitiated my bullish stance on BIP within my Motley Fool CAPS portfolio, and I invite you to join in the fun and cast your vote today.

Brookfield Infrastructure Partners is a Motley Fool Inside Value recommendation. Cemex is a Motley Fool Stock Advisor choice. Brookfield Asset Management and Brookfield Infrastructure Partners are Motley Fool Global Gains recommendations. Brookfield Infrastructure Partners is a Motley Fool Hidden Gems pick. The Fool owns shares of Brookfield Infrastructure Partners. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Peabody Energy. The Motley Fool has a disclosure policy.


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