Brookfield Infrastructure and Enbridge: Strong Dividend Growth

The report highlights Brookfield Infrastructure and Enbridge as top dividend stocks with strong growth prospects. Both companies offer high yields and stable cash flows, making them attractive investment options for December.

Date: 08-12-2024

AI Rating: 8

The report emphasizes the investment appeal of Brookfield Infrastructure (NYSE: BIPC) and Enbridge (NYSE: ENB), focusing on their solid dividend payments and growth potential. Brookfield is noted for its consistent dividend increases over 15 years, achieving a compound annual growth rate of 9% and currently offering a dividend yield near 4%, significantly higher than the S&P 500.

The analysis reveals that Brookfield's ability to pay dividends is backed by a well-supported cash flow structure, where 90% of its business is contracted or regulated. With an expected dividend payout ratio of 67% of its funds from operations (FFO), the company fits well within its target range, signifying financial health. Additionally, Brookfield anticipates a 10% annual growth in FFO, supported by various growth drivers, including a healthy backlog of $8 billion in projects and a strong pipeline for mergers and acquisitions (M&A).

On the other hand, Enbridge has demonstrated a commendable dividend increase streak of 30 consecutive years, offering a dividend yield over 6%. The stability of Enbridge's earnings is attributed to its low-risk business model, with 98% of earnings derived from stable assets, ensuring predictable cash flows. The company aims to maintain a dividend payout ratio of 60%-70% relative to its stable cash flow, indicating a balanced approach to growth and returns to shareholders. Enbridge also projects solid growth in cash flow per share, anticipating about a 3% annual rate through 2026 and 5% afterwards, allowing for a similar increase in dividends.

Overall, both companies not only provide high-yield dividends but also exhibit robust growth potential, appealing to investors seeking passive income along with capital appreciation.

Stocks: BIPC ENB