There are many stocks that could potentially benefit from the expected increase in infrastructure spending, but not all of them fall into the "forever stocks" category. In this Fool Live video clip, recorded on Nov. 15, Fool.com contributor Jason Hall thinks Brookfield Infrastructure (BIP -0.65%) could be a great investment for not only the next several years but for decades to come.
Jason Hall: Brookfield Infrastructure, ticker BIP, and then there's Brookfield Infrastructure Corporation (BIPC), BIPC. I'm not going to get into the details of the difference on the tickers, look it up. But they're the same ownership in the same business. I'll just say that. What is Brookfield Infrastructure? Matt, you were talking about those trends. You were talking about some big trends. I'm a big-time trends investor. I think there's no bonus returns for degree of difficulty, so if you find a big trend that's long term and is very large and then find great businesses that are going to participate in that trend, that does a lot of the hard work for you right there, in terms of returns. Global infrastructure is gigantic.
Here in the U.S., the infrastructure bill that just got down a trillion dollars toward real shovel-ready projects and whether it's telecommunications or roads or bridges or water, any of that sort of thing. We have major modernization needs in the U.S. We need to improve our existing infrastructure, we need to expand it, but really we need to modernize it and improve it more than anything else.
You get outside of the U.S. and the opportunity is largely about growth. You think about South America, this is a dynamic young, growing economy. You talk about Asia Pacific, Southeast Asia, very high-growth economies. Brookfield Infrastructure is a global infrastructure company. What do they do? They build, develop, acquire, improve these assets, run them, grow their cash flows, and then once those assets stabilize at a certain level of cash flows, the growth potential no longer meets management's long-term goals for Brookfield Infrastructure, they sell off that asset, they take the capital, and they repeat the process. They're really good when they sell those assets, at getting a higher multiple than they bought. They're really good at buying it, they're really good at operating and improving and growing it, and then they're really, really good at selling it.
What have they been able to do? As a starting point since going public in 2009, grow the distributions. That's MLP-speak for a "dividend" at an average compound annual growth rate of 10% year-over-year. It's made this an absolute market bidding stock. It has absolutely crushed the market since going public on a 10-year basis, a five-year basis, a three-year basis. If you want a business that's going to give you a very high likelihood of being able to outperform the market over the long term, this is it. If you want a business that when you reach the point in your investing career where you are looking for stable dependable income, it's going to grow at a higher rate than inflation, this is the business to own. To me, it's a truly forever stock.
The last thing here is that process they have, the capital allocation process, the buying, the improving, the selling. They have a great corporate culture of doing this. This isn't a company that relies on one executive to do it well. Brookfield Asset Management (BN 0.34%), the parent company, they're really, really good at this. This is their core business. They've turned over the CEO multiple times at Brookfield Infrastructure, bringing people from Brookfield Asset Management over to run it. That corporate culture is so good. I'm not worried about them losing a key executive and losing that edge that they have.
