The world has changed a lot over the last 20 years. It seems inevitable that it will continue evolving over the next two decades. While it's impossible to know exactly what the future might look like, we can see certain long-term trends emerging that give us a glimpse into what's ahead. We're witnessing companies bringing their businesses into the digital age, the economy transitioning energy sources, and the reversal of globalization.
Investors who plug into these megatrends by investing in stocks poised to capitalize on them should do very well over the next couple of decades. A great way to start is by investing $5,000 or so across American Tower (AMT -0.26%), Brookfield Infrastructure (BIPC -0.47%) (BIP -1.33%), and Enbridge (ENB 1.68%). Here's why that move could pay big dividends in the coming years.
Plugged into the data megatrend
American Tower is a real estate investment trust (REIT) focused on owning and leasing data infrastructure like cell towers and data centers. Data usage is growing rapidly as businesses undergo digital transformation initiatives to bring more of their business processes online. Likewise, consumers are using more data as they stream videos and other content at home and on the go. As a result, companies need more infrastructure to store and transmit data at faster speeds.
This trend should allow American Tower to add more tenants and sites to its global tower portfolio and expand its data center business. These drivers should enable American Tower to grow its cash flow and dividend at healthy rates.
American Tower currently offers a dividend yield of nearly 2.9%. It has grown that payout at a double-digit rate for over a decade. Given the growth ahead, it should have plenty of power to continue increasing its payout. Add that income to its earnings growth, and American Tower could produce market-crushing total returns over the next 20 years.
Powered by three megatrends
Global infrastructure operator Brookfield Infrastructure has positioned its business to capitalize on three megatrends: Digitalization, decarbonization, and deglobalization. The company sees a $1 trillion investment opportunity to upgrade global data infrastructure over the next five years.
The world needs to replace copper wires with fiber to increase network speeds, build more wireless infrastructure to support 5G network upgrades, the Internet of Things, and artificial intelligence, and add significantly more data center capacity. Brookfield has invested billions of dollars in building data infrastructure platforms to capitalize on those opportunities.
Brookfield has also made several investments around the decarbonization theme. It sees opportunities to help companies decarbonize their operations and assist people with reducing their energy consumption. It also has a large-scale natural gas infrastructure business to help supply the world with more of that lower-carbon fuel.
The company is also investing heavily in the deglobalization theme. Persistent supply chain issues are leading more companies to onshore manufacturing capacity. Brookfield recently pledged to invest up to $15 billion to help Intel (INTC 1.77%) build two new semiconductor manufacturing facilities in the U.S. as the country seeks to onshore chipmaking capabilities. That deal will help Intel fund its large-scale manufacturing capacity expansion program.
Brookfield sees tremendous investment opportunities across these megatrends. They should enable the company to grow its cash flow at a 6% to 11% annual rate over the long term. That should support 5% to 9% yearly growth in its 3.5%-yielding dividend.
Fueled by the energy transition
Energy infrastructure giant Enbridge is in an excellent position to capitalize on the energy transition theme. The company has steadily shifted its focus to lower-carbon energy sources like natural gas and renewables over the years.
It has an extensive backlog of capital projects to continue expanding in those areas. It's building several offshore wind farms in Europe. Meanwhile, it recently acquired an onshore renewable energy developer in North America. On top of that, it continues to expand its extensive gas infrastructure, including investing in an export facility.
That backlog has Enbridge on track to grow its cash flow per share at a 5% to 7% annual rate through at least 2024. Meanwhile, it has increased visibility into its post-2024 growth prospects after securing several large-scale projects this year. Those growth drivers should enable Enbridge to continue expanding its 6.9%-yielding dividend, which it has done for 28 straight years.
Megatrend-driven growth
American Tower, Brookfield Infrastructure, and Enbridge have aligned their businesses to capitalize on at least one megatrend. Because of that, they should be able to grow for decades to come. That makes them great stocks to buy and hold for the ultra-long term.
