Investors looking for growth don't often give much consideration to utility companies or companies that own and operate infrastructure like pipelines and telecommunications systems. And for good reason. In general, utility and infrastructure investments generate large cash flows but usually not much growth. They're often good choices if you're looking for dependable income, but without market-beating growth.

Well, Brookfield Infrastructure Partners (NYSE:BIP) and NextEra Energy (NYSE:NEE) break the mold. Over the past decade, both companies have delivered big growth in their businesses and rewarded shareholders with market-beating share price gains. And it gets better. When you add in the companies' dividends -- both of which have been increased regularly for years -- investors have enjoyed market-crushing total returns for years. And it's not a stretch to expect both to keep delivering for years to come.

Man with hand on his chin standing in front of a chalkboard with weighted scales drawn behind him.

Image source: Getty Images.

But which is the better buy right now? Since the beginning of 2019, Brookfield Infrastructure and NextEra have returned 55% and 41% in total returns, respectively, and both are at or near all-time highs. Moreover, it's not really a stretch to say that both are probably a little on the "expensive" side after such strong runs, whether it's to their earnings or cash flows, or based on the dividend yield. Yet even with that said, these are also the kinds of recession-proof businesses that can still be worth buying, even if you pay a little bit of a premium. Let's put them both through their paces and see what we learn.

Which is the better business?

This isn't a simple comparison, because the two do different things, with minimal overlap.

Brookfield Infrastructure is a global business, acquiring and operating water, transportation, telecommunications, and energy infrastructure all around the world. These assets are often local monopolies, and Brookfield has a long track record of buying at discounted prices, and then investing in and improving them to grow cash flows. It focuses on finding assets in areas where it can grow them, often at mid-to-high single-digit rates (pretty fast growth for infrastructure). Additionally, Brookfield has proven really nimble, taking assets where growth has matured and selling them for a premium to the cash flow multiple it paid, and then "recycling" the proceeds into the next high-growth asset opportunity.

This is a complex process that can result in "lumpy" results; management may sell off an asset months or even several quarters before it's ready to reallocate the proceeds. That has caused volatility in its stock price in the past, but this disciplined approach to capital allocation and finding high-quality growth has delivering amazing results for investors. Over the past decade, Brookfield Infrastructure's operating and free cash flow per share has increased an enormous amount:

BIP CFO Per Share (TTM) Chart

BIP CFO Per Share (TTM) data by YCharts.

Even better, its results are essentially recession-proof. People and businesses rely on its infrastructure across every economic environment, keeping the cash flowing.

NextEra Energy is another recession-resistant business, but it's focused on electricity and conducts all of its business in the U.S. and Canada. It owns Florida Power & Light, the biggest regulated electric utility in the U.S., and also operates NextEra Energy Resources, its independent power unit, which has operations in 36 states and four Canadian provinces. NextEra Energy Resources owns wind, solar, nuclear, and natural gas power generation facilities, gas pipelines, and energy storage facilities. Combined, it's the largest generator of wind and solar energy on earth.

What makes NextEra such a compelling business is the combination of where its regulated utilities operate -- Florida -- and the significant growth prospects for NextEra Energy Resources. Florida is one of the fastest-growing states, and much of that growth is happening in markets Florida Power & Light serves. Moreover, the falling costs for wind and solar technology, combined with falling prices for energy storage systems, is set to drive big growth for NextEra Energy Resources all across North America.

These are both very strong, well-run businesses with top leadership, built to perform across any economic environment. Factor in their differences, and it's impossible to say one's better than the other.

Winner: Too close to call

Which has better growth prospects?

For NextEra, the markets its regulated utility operations are in will continue to see population growth and strong demand for more energy in the years to come. Moreover, NextEra Energy Resources will continue to find lots of opportunities to develop and acquire energy generation, transmission, and storage systems in the future. The demand for energy -- particular lower-carbon and renewable sources such as the ones it builds and operates, is only set to increase.

But as good as NextEra's prospects are, I think Brookfield's are even better. Since it invests globally, and heavily in developing markets, Brookfield Infrastructure is primed to profit from a growing global middle class. Over the next decade, about 1 billion new global urbanites will rely on water, telecom, transit, and energy infrastructure that Brookfield Infrastructure will play a big role in developing.

The U.S., simply put, isn't likely to experience the same population growth as many of the markets Brookfield Infrastructure participates in. Over the next decade, the U.S. will see the last baby boomer turn 65, and so far, younger cohorts aren't having kids at the same rate as prior generations.

Put it all together, and Brookfield's focus on international markets and multiple asset classes seem likely to result in better growth prospects in the future. 

Winner: Brookfield Infrastructure

Which is the better valuation?

To be honest, neither is what I'd call "cheap" right now. "Pricey" is probably a more apt description.

At recent prices, NextEra Energy trades at or above its most expensive valuations in years, by earnings, cash flows, and dividend yield. At nearly 36 times trailing earnings and 15 times operating cash flows, you're paying not just a premium to other utilities, but about the highest you'd ever have paid for NextEra. And all its stock price growth over the past year has pushed the dividend yield down to 2.1%, nearly one-third lower than the roughly 3% yield most high-quality utilities pay.

Brookfield Infrastructure units have also gone on a tear this year, and trade close to the all-time high. From a valuation perspective, it trades for about 15 times expected 2019 funds from operations, or FFO, a more appropriate measure of its profits than GAAP net income due to its corporate structure as a limited partnership. Investors have also seen its dividend yield fall to some of the lowest levels in the past decade, following the big run-up in its stock price this year:

BIP Chart

BIP data by YCharts.

But I think even its inflated valuation represents a better buy than NextEra. With a yield that's still close to 4% and a slightly "less expensive" earnings valuation, Brookfield offers investors a larger margin of safety.

Winner: Brookfield Infrastructure

Better Buy: Brookfield Infrastructure Partners

Let me start by saying this: Investors looking for a true long-term investment -- buying today and holding for five-plus years -- probably won't go wrong with either of these two. Both are well run by excellent management and have strong prospects. That should make up, over time, for the risk of paying too much today.

But with that said, Brookfield Infrastructure's combination of more diverse global opportunities and the much higher dividend yield make up for more of the valuation concerns. Starting out with about double the dividend yield, and with a management team that's proven it can allocate capital with the best of them all over the world, puts it ahead of NextEra Energy at current valuations.