Brookfield Infrastructure Partners LP (NYSE:BIP) and Emera Incorporated (NASDAQOTH:EMRAF) have some notable similarities. Both own energy generation, transmission, and distribution infrastructure in geographically diverse locations. Both distribute healthy amounts of cash flow to unitholders and shareholders, with distribution yields of 4.6% and 5.7%, respectively. Oh, and both have seen their stock prices slide by double digits in 2018.

That could have income investors wondering if now's the time to buy these high-yield stocks. Each business has above-average growth potential and is solidly profitable, which bodes well for these stocks to provide income to portfolios for the long haul. However, digging into the details shows that one of these infrastructure stocks is the better buy.

A shipping container at port.

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The matchup

Emera is based in Nova Scotia (so all totals presented here will be in Canadian dollars), but it owns energy utilities and distribution assets in places as far west as New Mexico and as far south as the Caribbean. The business boasts six operating segments with a combined CA$29 billion in assets that generated $6 billion in revenue and $1.5 billion in operating cash flow in 2017. The growth strategy is relatively straightforward: focus almost exclusively on generating electricity from natural gas and renewable energy assets. 

Two recent developments show the business is on the right path. First, Emera completed the acquisition of TECO Energy in late 2016, adding lucrative assets in New Mexico and Florida, including the solar-focused utility Tampa Electric that now provides 42% of the company's operating income. Second, it recently started up a $1.8 billion subsea transmission line providing renewable hydropower from Newfoundland to Nova Scotia. The investment will allow its Nova Scotia Power customers to rely on hydropower for 40% of their energy needs, with future wind projects to be added.  

While the pieces for growth are in place for Emera, the company has struggled to impress investors recently. The main sticking point is the balance sheet, which got quite a bit heavier following the $10.7 billion acquisition of TECO Energy. A relatively large $700 million share offering in late December made a dent, but diluted shareholders by 10%.

Similarly worrisome, the new American corporate tax reform isn't kind to foreign companies. The company warned its cash flow will take a $75 million to $125 million hit this year as a result, with "minimal" impacts in future periods. Given all that, it's easy to see why the stock has slid 18% year to date. 

High voltage transmission lines with a multicolor sky backdrop

Image source: Getty Images.

Meanwhile, with a year-to-date loss of 13%, Brookfield Infrastructure Partners isn't faring much better. The company is about twice the size of Emera, but owns toll roads, ports, railroads, and data infrastructure in addition to energy distribution and transmission assets, which actually only comprise 19% of total assets. The business also has a broader geographical distribution that its peer, spanning Australia, India, Europe, South America, and North America.

The long-term growth strategy is simple: tap into opportunities in each market while building on its core strengths in specific industries. For example, the company's European strategy includes expanding its fiber-optic network to homes and businesses in France, which is part of its global focus on "data utilities" that includes cellphone towers and, perhaps soon, data centers.

Management's goal is to grow the distribution 5% to 9% each year for the foreseeable future. To do so, the business will need to grow funds from operations (FFO) -- akin to earnings per share -- at a healthy clip to fund that expansion and still pay for new capital investments. Investors aren't exactly sold on Brookfield's ability to pull it off.

The lack of confidence from Wall Street stems from a recent admission by Brookfield Infrastructure Partners stating it will be more careful with capital deployments in the near term. Investors think that'll limit growth -- such as growing the distribution 5% per year, or the lower end of the target range -- and have voiced their displeasure by sending shares lower. Throw in ongoing economic turmoil in Brazil, where Brookfield has a significant presence, and there's an uncharacteristically high amount of uncertainty facing the business at the moment.

A long-exposure picture of a toll road at night

Image source: Getty Images.

By the numbers

Both companies are facing a fair share of uncertainty, so investors might turn to head-to-head comparisons on several important financial metrics to see if one business is better off than the other. Here's how Emera and Brookfield Infrastructure Partners stack up:  

Metric

Emera

Brookfield Infrastructure Partners

Market cap

$7.1 billion

$15.3 billion

Dividend yield

5.7%

4.6%

Targeted annual dividend growth to 2020

8%

5% to 9%

Dividends as percent of earnings / FFO

81%

65%

Enterprise value-to-EBITDA ratio

10.8

11.8

Price-to-book ratio

1.4

2.2

5-year total return

12.7%

110%

Data sources: Yahoo! Finance and company presentations.

The companies are pretty evenly matched, but the selected metrics show a few notable distinctions. Emera pays a much higher dividend and aims to grow it at a faster annual clip for the next several years -- one area investors have cast doubt on for Brookfield Infrastructure Partners. The North American-focused business also trades at a much lower book value, which has had the effect of lowering its EV-to-EBITDA ratio below its peer's. Of course, that's directly related to worries over the balance sheet, and a key reason why investors have sent shares lower.

However, the last metric demonstrates why the market has placed a premium on units of Brookfield Infrastructure Partners: It has been an amazing investment in recent years. Shares of Emera actually weren't that far behind in mid-2016, but that changed when the TECO Energy acquisition closed. As investors raised their eyebrows at the ballooning debt on the balance sheet, they started to reconsider owning the stock, which has actually lost value in the two years since.

Hillside of solar panels at sunset.

Image source: Getty Images.

The better buy is...

While shares of Emera could end up being grossly undervalued based on the business's future potential, investors are right to acknowledge that deleveraging the balance sheet could be uncomfortable in the next few years. In contrast, investors seem to be overreacting to recent announcements from Brookfield Infrastructure Partners. The globally diversified business has an impressive track record of creating value for unitholders, which so investors shold probably give the benefit of the doubt to management's near-term sensitivity to deploying capital.

That makes the recent slide in Brookfield Infrastructure Partners more appetizing for long-term investors, and the better buy in this matchup.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.