Brookfield Infrastructure (BIP +2.37%)(BIPC +0.00%) recently reported strong fourth-quarter and full-year results. That enabled the global infrastructure giant to increase its dividend by another 6%. It has now grown its payout for 14 straight years.
Brookfield sees more growth ahead. Here's a look at last year's strong showing and what it sees coming down the pipeline for 2023 and beyond.
Another excellent year
Brookfield Infrastructure delivered excellent results in the fourth quarter, growing its funds from operations (FFO) to a record $556 million, or $0.72 per share (up 14.4% overall and 10.% on a per-share basis). That helped drive FFO to $2.1 billion, or $2.71 per share for the full year -- a 20% increase from 2022 or 12% on a per-share basis -- with equal contributions from organic growth drivers and acquisitions.
The company grew FFO across each of its segments:
Data source: Brookfield Infrastructure Partners. Chart by the author.
Brookfield Infrastructure's midstream segment was the largest growth driver as FFO rocketed 51%. The primary fuel source was the acquisition of Inter Pipeline in the fourth quarter of 2021. Brookfield's midstream operations also benefited from higher commodity prices, which increased utilization and fueled higher market-sensitive revenues.
Brookfield's transportation segment also delivered strong results last year, growing its FFO by 13%. The primary driver was inflationary rate increases across its businesses, higher volumes, and the completion of $400 million of expansion projects. Those drivers more than offset the sale of its North American container terminal last year.
The utilities segment grew its FFO by 5% last year. It also benefited from inflationary rate increases, which boosted earnings by 8%. In addition, Brookfield completed $485 million of expansion projects and benefited from two recently completed Australian utility acquisitions. Those power sources helped offset higher borrowing costs from increased interest rates and debt levels and the sale of its North American district energy business in 2021.
Finally, Brookfield's data infrastructure segment delivered a slight FFO increase. The business unit benefited from increasing customer utilization and inflationary rate escalators. That helped offset foreign exchange headwinds.
NYSE: BIPC
Key Data Points
A look at what's ahead for Brookfield Infrastructure
Brookfield secured and has closed $2.9 billion of investments across five transactions over the past year. They'll contribute to the company's results in 2023. That incremental income, along with its organic growth drivers of inflationary rate increases, expansion projects like the ramp-up of its Heartland facility in Canada, and volume growth should drive 12% to 15% FFO per share growth this year.
Meanwhile, the company continues to recycle capital to enhance its growth profile. Brookfield recently closed two asset sales, raising $400 million to boost its corporate liquidity to $4.3 billion. It's working to close the sale of its India toll road portfolio and its 50% owned port in Australia, which it expects to complete in the first half of this year and raise $260 million. It recently launched its next phase of asset sales. The company expects to raise a total of $2 billion from selling assets this year.
Those proceeds will give Brookfield the funds to make new investments. It has already replenished its investment pipeline. It's evaluating several corporate carve-out transactions (i.e., buying assets or business units from a large corporation) and reviewing public-to-private opportunities to acquire publicly traded companies. Those deals should accelerate Brookfield's growth rate over the coming years. It sees organic growth above its 6% to 9% target because of elevated inflation and its strong capital project backlog, with acquisitions enhancing that outlook.
A great buying opportunity
Like most companies, Brookfield's stock price has been under pressure over the past year. However, as its 2022 results show, it's delivering strong results. With more growth ahead, the company looks like a compelling investment opportunity, especially given its growing and attractive dividend (it yields more than 3%). These factors set investors up to potentially earn strong total returns from Brookfield in the coming years.
