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Why Brookfield Infrastructure Partners Stock Gained 10.7% in 2020

By Neha Chamaria - Jan 7, 2021 at 9:21AM

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The infrastructure giant's latest numbers spurred hopes of a strong 2021.

What happened

Shares of Brookfield Infrastructure Partners ( BIP 2.69% ) rallied 10.7% in 2020, according to data provided by S&P Global Market Intelligence. Much of those gains came in the latter part of the year, which is also when the company displayed visible signs of a recovery and set itself up for a strong 2021.

So what

Excitement rang high among Brookfield investors as 2020 kicked off, with the company on the verge of acquiring Cincinnati Bell in a multi-billion dollar deal. The offer, however, fell through when Cincinnati decided to sell itself to Macquarie Group. Brookfield didn't find another opportunity this big in 2020, but it made some notable acquisitions nonetheless. One was an investment of $600 million on 135,000 telecom towers from India's largest conglomerate later in the year. The deal reaffirmed Brookfield's hunger for growth in data infrastructure even as it proved its resiliency in a challenging year.

A ground view of telecom towers.

Image source: Getty Images.

The COVID-19 pandemic expectedly hit Brookfield's business, but it bounced back strongly and delivered solid third-quarter numbers in November, which drove its shares up by double digits. Its data infrastructure segment clocked 40% year-over-year growth in funds from operations (FFO), which allowed Brookfield to grow its FFO by 3% during the nine months ended Sept. 30, 2020. Brookfield also invested roughly $425 million in Cheniere Energy Partners in the third quarter as it found an opportunity in a weak energy market.

The biggest highlight of 2020 for Brookfield investors, though, was an unusual stock split. In April, the company formed a new entity, Brookfield Infrastructure Corporation ( BIPC 2.71% ), and rewarded its existing shareholders with one share in the new entity for every nine shares they held in Brookfield Infrastructure Partners. Brookfield Infrastructure shares have nearly doubled since.

Now what

"Looking ahead, we anticipate 2021 will be a year of meaningful growth for Brookfield Infrastructure," said CEO Sam Pollock in the company's third-quarter earnings release. "Our very strong liquidity position, along with the positive momentum being generated by our capital recycling program, should enhance our ability to execute on compelling opportunities."

In short, investors can look forward to a busy year for Brookfield, and hopefully make meaningful returns on the stock while enjoying a good dividend yield that's currently hovering around 4%.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Brookfield Infrastructure Partners L.P. Stock Quote
Brookfield Infrastructure Partners L.P.
BIP
$58.31 (2.69%) $1.53
Cheniere Energy Partners, L.P. Stock Quote
Cheniere Energy Partners, L.P.
CQP
$40.84 (0.89%) $0.36
Cincinnati Bell Inc. Stock Quote
Cincinnati Bell Inc.
CBB
Brookfield Infrastructure Corporation Stock Quote
Brookfield Infrastructure Corporation
BIPC
$62.14 (2.71%) $1.64

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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