Infrastructure supports the movement of energy, water, goods, people, and data, making it the physical backbone of the global economy. As populations grow and systems age, the need for investment continues to rise.
In the U.S. alone, more than $3.5 trillion is needed by 2033 to modernize surface transportation, according to the American Society of Civil Engineers. Additional investment is required across energy, aviation, and water systems. Globally, infrastructure needs exceed $80 trillion through 2040, according to Swiss Re.
Because governments often lack the resources to fund these projects alone, private companies are playing a growing role, creating long-term opportunities for investors.
Types of infrastructure companies
Infrastructure companies generally fall into three broad categories:
- Transportation infrastructure: Airports, railroads, toll roads, and ports that move people and freight.
- Commodity infrastructure: Assets that produce, transport, and store energy and water, including pipelines and utilities.
- Data infrastructure: Communications towers, fiber networks, and data centers that support global connectivity.
Five top infrastructure stocks to consider
Below are five top infrastructure companies that have long histories of creating shareholder value and are well positioned to benefit from the growth in infrastructure spending in the coming years.
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Brookfield Infrastructure (NYSE:BIPC) | $6.3 billion | 3.59% | Gas Utilities |
| Enbridge (NYSE:ENB) | $106.5 billion | 5.51% | Oil, Gas and Consumable Fuels |
| American Tower (NYSE:AMT) | $83.9 billion | 3.79% | Specialized REITs |
| Caterpillar (NYSE:CAT) | $307.6 billion | 0.90% | Machinery |
| Fluor (NYSE:FLR) | $7.4 billion | 0.00% | Construction and Engineering |
1. Brookfield Infrastructure
NYSE: BIP
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2. Enbridge
NYSE: ENB
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Enbridge (ENB -1.13%) is one of the leading energy infrastructure companies in North America. It operates oil and gas pipelines, other midstream assets, and natural gas utilities. The company also has a sizable renewable energy business.
Enbridge has increased its dividend for 30 consecutive years. Despite the shift toward cleaner alternative energy sources, it’s still growing and estimates it can increase its annual cash flow per share at a 3% compound annual rate through 2026 and by 5% thereafter, leaving Enbridge well-positioned to continue increasing its high-yielding dividend.
3. American Tower
NYSE: AMT
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NYSE: CAT
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NYSE: FLR
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What to look for when investing in infrastructure stocks
Investors should evaluate several factors when considering investing in infrastructure stocks, including:
- Business model: Some companies own and operate infrastructure, while others build infrastructure for clients. Infrastructure operators tend to generate steadier revenue compared to developers.
- Infrastructure focus: Some infrastructure companies focus on a specific type of infrastructure (e.g., energy pipelines or telecom towers) while others have more diversified operations.
- Financial profiles: Given the costs of building and maintaining infrastructure, these companies need to have strong financial profiles to fund their growth and withstand potential setbacks.
How to invest in infrastructure stocks
It's easy to add infrastructure stocks to your portfolio. Here's a step-by-step guide on how to buy infrastructure stocks:
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Is investing in infrastructure right for you?
The global economy requires trillions of dollars of spending in the coming decades to rebuild aging infrastructure and construct new assets to meet the needs of steadily rising populations. With such immense needs and so many ways to invest, adding infrastructure stocks or ETFs to your investment portfolio is a straightforward way to profit from this megatrend.
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FAQ
FAQ on investing in infrastructure stocks
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