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This Stock Could Be a Big Winner of Infrastructure Spending

By Matthew Frankel, CFP® and Jason Hall – Sep 23, 2021 at 7:21AM

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With trillions in infrastructure spending likely, here's one way to set yourself up to profit.

While there is still quite a political process that needs to play out, the reality is that trillions of dollars need to be spent on infrastructure in the United States, and sooner rather than later. In this Fool Live clip, recorded on Sept. 13, longtime Fool.com contributor Jason Hall discusses one of his top infrastructure stocks that could be a big winner for investors. 

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Jason Hall: It's Brookfield Infrastructure. I think it's such an interesting business. It's so compelling in a lot of ways. There's two tickers, there's Brookfield Infrastructure Partners (BIP -1.89%), which is BIP, and then there's Brookfield Infrastructure Corporation (BIPC -2.78%), which is ticker BIPC. Economic equivalents, you buy one unit of BIP or you buy one share of BIPC, you own the exact same portion of the exact same business. The difference is the corporate structure. Owning that corporate entity, BIPC is a little easier. There's a lot of large investments entities that don't invest in publicly traded partnerships or limited partnerships.

Indexes typically don't throw partnerships into them, so by creating a corporate entity, they expanded the potential investor pool, is really why it exists. Beyond that, they are economically the same thing. But what is it? You probably want to know what it is if you don't know. The short version is it's an infrastructure asset, ownership, and development business. It's like a REIT in a way if you think about the reasons you would invest in it and you would own it.

What Brookfield Infrastructure does is acquire, develop, operates, and generally improve different kinds of infrastructure assets. Things like clean water, wastewater, roads, transportation, toll roads, ports, energy infrastructure, gas transmission, utility operations, gas utilities, power transmission, all of those things, over the past couple of years is focused on growing its telecommunications infrastructure. You think about, fiber data centers. Starting to overlay with some of the companies that we've already talked about, like American Tower for example, and what we're going to talk about that's one of our top-rated stocks later on the data center side. Really, really great business.

They're a history of capital allocation, turning that those capital investments in a meaningful cash flows, growing those cash flows, and then delivering returns to investors through the distribution or dividend, that's the same thing, growing that quarterly payout at a high single-digit or low double-digit rate. Essentially every single year since it went public, right at the peak of the global financial crisis, has made this a really strong market beating company. I think if you look at the international growth of infrastructure, it's so well-positioned because this is not a North American play, this is a global play. They're really, really good at what they do. Brookfield Asset Management (BAM -3.42%), ticker BAM, is the parent company. Very, very well-connected. Lots of dollars flow into Brookfield Asset Management. This is one of the largest alternative asset managers on earth. Much money flows in, they're so well-connected, they know the best places to invest in different kinds of infrastructure.

One of the things I like about this that's different than some of the businesses we've talked about is their optionality, their ability to invest in the right geographies and in the right asset class at the time to get the best returns. Really, really impressed with what they've been able to do. This is consistently been one of the best total return long-term generators of any of the stocks that we're going to talk about today.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV, Brookfield Infra Partners LP Units, Brookfield Infrastructure Corporation, and Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

Stocks Mentioned

Brookfield Infrastructure Partners Stock Quote
Brookfield Infrastructure Partners
BIP
$35.35 (-1.89%) $0.68
Brookfield Asset Management Stock Quote
Brookfield Asset Management
BAM
$45.13 (-3.42%) $-1.60
Brookfield Infrastructure Stock Quote
Brookfield Infrastructure
BIPC
$44.41 (-2.78%) $-1.27

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

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