Brookfield Infrastructure Partners (BIP -1.62%) is one of the safest stocks in the utilities sector. In this clip from "Ask Us Anything" on Motley Fool Live, recorded on March 25, Fool.com contributor Jason Hall outlines several ways that the company is able to generate predictable long-term cash flows as well as dividends for shareholders.
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Jason Hall: I'm going to talk about the Disney (DIS 1.26%) of infrastructure. I'm going to talk about Brookfield Infrastructure Partners because this is like everything a safety stock should be. It's a company that operates in businesses infrastructure where you have a very high cost of competitive entry.
It's pretty expensive just to build another transmission line or power line or water infrastructure or natural gas infrastructure. A lot of these are locally regulated monopolies. Those are other things that make the barriers to entry very high. Most of the capacity on its assets, it sells on long-term contracts.
By the way, those contracts usually also have clauses that will elevate rates for inflation, they're often denominated in U.S. dollars. Local currency fluctuations don't affect the company's cash flows as much and that's great because this is a dividend stock. That's another thing that I think often if you think about a safety stock, it's a company that's going to pay you.
A company paying you, especially if the yield is a little bit on the above-average side, from a mental perspective, it makes it a lot easier to hold onto it because you know that that quarterly check is going to keep coming in and keep showing up in your account. Especially when there's the ability to be able to grow it over time. You have secure long-term cash flows, predictable cash flows, the demographics are in its favor as the global middle-class expands.
That should continue to provide opportunity to continue to develop new assets, and that's also optionality because this isn't just a company that does one thing really well, it's like Disney. We think about Disney as being an entertainment company but the fact is that they can take those franchises and they can monetize them in a dozen different ways.
With Brookfield, they can take its cash flows and they can reallocate it in all kinds of different sectors depending on where there's opportunity and geographies, depending on where there's opportunity. I'll say Brookfield Infrastructure is my No. 1.