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Growth & Income

Brookfield Infrastructure Partners L.P. (BIP - Snapshot Report) offers investors solid, stable growth and a juicy 5% dividend yield at a reasonable price.

And earnings estimates have been rising after the company delivered better than expected results for the fourth quarter. It is a Zacks #2 Rank (Buy) stock.

Company Description

Brookfield Infrastructure Partners is comprised of long-life assets that provide essential products and services for the global economy. It primarily operates in 3 segments:

Utilities: (58% of total funds from operation)
Transport & Energy: (35%)
Timber: (7%)

The company was established by Brookfield Asset Management (BAM), which still acts as the manager of Brookfield Infrastructure.

Fourth Quarter Results

Brookfield Infrastructure delivered strong fourth quarter results on February 9. Funds from operation (FFO) per unit came in at 54 cents, beating the Zacks Consensus Estimate of 3 cents. It was a whopping 38% increase over the same quarter in 2010.

Total revenue less direct costs rose 69% to $181 million. This was mostly driven by a 78% increase in the Transport & Energy segment and a 61% increase in the Utilities segment, which was boosted by an acquisition.

Outlook

Analysts revised their estimates higher for both 2012 and 2013 off the strong quarter. This sent the stock to a Zacks #2 Rank (Buy).

The Zacks Consensus Estimate for 2012 is now $2.39, up from $2.30 before the report. And its 2013 consensus estimate is currently $2.82, representing 18% growth over the 2012 estimate.

CEO Sam Pollock stated that company "expect[s] to increase [its] funds from operations in the future through both organic growth and acquisitions, while maintaining a conservative, investment grade balance sheet."

Dividend

This solid balance sheet has allowed the company to raise its distribution 3 times since early 2011. It currently yields a stellar 5%.

Brookfield Infrastructure targets a payout ratio between 60-70% of FFO, and for 2011 its payout ratio was 55%. So expect more distribution hikes on the horizon.

Valuation

The valuation picture looks reasonable with shares trading at just 12.2x 12-month forward earnings. This is below the industry median of 13.6x.

Its price to tangible book ratio of 2.3 is above the peer group multiple of 1.6, however. But this is still within value territory.

The Bottom Line

With rising estimates, strong growth projections, a fat 5% dividend yield and reasonable valuation, Brookfield Infrastructure offers a lot to like.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Co-Editor of the Reitmeister Value Investor.

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