The Biden administration is working on a $1.2 trillion infrastructure bill that would improve the country's roads, bridges, water systems, and broadband networks, among other things. Its passage would provide a huge boost to infrastructure stocks as it would drive investment in the sector. However, every time legislators seem to make progress on a deal, they hit another stumbling block.
While passing an infrastructure bill would boost spending, several companies are on track to grow at a healthy rate over the next few years, even if the deal falls apart again. That makes them great infrastructure stocks to buy amid the current uncertainty. Three that stand out are Atlantica Sustainable Infrastructure (AY 3.28%), Brookfield Infrastructure (BIP 2.82%) (BIPC 0.84%), and Crown Castle International (CCI 1.42%).
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Visible growth ahead
Atlantica Sustainable Infrastructure owns a globally diversified infrastructure portfolio, including renewable energy and natural gas power plants, electric transmission lines, and water desalination facilities. These assets generate stable cash flow backed primarily by long-term, fixed-rate contracts. That gives Atlantica the money to pay an attractive dividend -- it currently yields 4.5% -- and invest in expanding its portfolio.
The company expects to invest $300 million per year on development projects and third-party acquisitions. It already has a large pipeline of opportunities lined up due to its strategic partnerships and in-house efforts. When added to organic growth, which includes contractual rate escalations and other factors, Atlantica expects to grow its cash available for distribution by 5% to 8% per share through 2024. Add that to the company's high dividend yield, and Atlantica can produce total returns in the 9.5% to 12.5% range over the next few years, without factoring in any upside potential from increased infrastructure spending.
A needle-moving deal provides additional fuel
Brookfield Infrastructure also owns a globally diversified infrastructure portfolio focused on utilities, energy midstream, transportation, and data infrastructure. These businesses also generate stable cash flow, primarily backed by long-term, fixed-rate contracts. That provides Brookfield Infrastructure with the money to pay a 3.7%-yielding dividend and invest in expanding its global infrastructure portfolio.
The company currently anticipates that it can organically grow its funds from operations (FFO) at or above the high end of its long-term target range to increase it by 6% to 9% per share each year. On top of that, the company anticipates that its capital recycling program of selling mature assets and reinvesting the proceeds into new investments can tack another 1% to 5% to its FFO per share each year. The company is close to enhancing that growth profile by making a large-scale acquisition for an energy infrastructure company in Canada. Add it all up, and Brookfield could easily produce double-digit annual total returns over the next few years even if the infrastructure bill remains in limbo.
Already well positioned without a deal
Crown Castle is an infrastructure-focused real estate investment trust (REIT). The company owns communications towers, small cell sites, and fiber optic cable. This infrastructure is essential to rolling out 5G networks in the U.S.
Crown Castle currently sees a decades-long investment cycle for 5G in the United States. It expects to build more small cells and fiber optic cable to support the industry's planned 5G rollout. In the company's view, these investments can drive 7% to 8% annual growth in its 2.7%-yielding dividend for the next several years. While Crown Castle would probably benefit from increased infrastructure spending in the U.S., it doesn't need a boost from Congress to deliver strong returns over the next several years.
These infrastructure stocks can thrive no matter what
While an infrastructure deal in the U.S. could provide additional investment opportunities for Atlantica, Brookfield, and Crown Castle, they'll do just fine if it never passes. They're great infrastructure stocks to buy either way, given the continued uncertainty. All three should be able to grow their already attractive dividends, which should enable them to generate compelling total returns in the coming years.
