Brookfield Infrastructure (BIPC +0.89%)(BIP 0.22%) recently closed the books on 2024 by reporting its fourth-quarter and full-year financial results. The leading global infrastructure operator posted strong results, which it expects will continue. That gave it the confidence to increase its high-yielding dividend (currently 4%) by another 6%, representing its 16th straight year of dividend growth.
Here's a look at what fueled its growth last year and what's ahead for the infrastructure stock.
NYSE: BIPC
Key Data Points
Another solid year
Brookfield Infrastructure generated $2.5 billion, or $3.12 per share, of funds from operations (FFO) last year. That was an 8% increase from 2023's level (and 10% higher after normalizing for the impact of exchange rates).
Organic growth helped drive its results last year. Elevated inflation levels (which benefited its inflation-linked contracts), stronger volume growth, and finishing over $1 billion of new capital projects helped drive a 7% increase in its FFO last year. It also benefited from completing more than $2 billion of new investments in the second half of 2023 and closing three accretive tuck-in acquisitions in 2024.
The company's transportation segment was the biggest growth driver. It contributed $1.2 billion of FFO last year, a nearly 40% increase. Brookfield benefited from acquiring its global intermodal logistics company (Triton), which closed in the third quarter of 2023, and purchasing an incremental 10% stake in its Brazilian integrated rail and logistics operation in the fourth quarter of last year. The transportation segment also benefited from higher volumes and tariffs across its rail networks (7% average tariff increase) and toll road portfolio (6% average tariff increase).
Brookfield's data infrastructure segment also delivered robust growth last year. Its FFO increased 21% to $333 million, driven by strong organic growth and the contribution of several new investments over the past year, including three data center platforms and a telecom tower portfolio in India.
The strength of those segments helped offset the lower results in the company's utilities and energy midstream segments. The main factor was the company's capital recycling program, as it sold several assets last year to fund new investments. Adjusting for asset sales, FFO in the utility segment would have increased by 7%, while midstream FFO would have grown by 11%, fueled by recently completed expansion projects and other organic growth drivers.
More of the same ahead
Brookfield Infrastructure has been very active in recycling capital. It achieved its target of generating $2 billion in proceeds last year, despite a challenging yet improving asset sale environment. The company noted in its earnings press release, "As we ended the year, we were seeing greater investor interest in high-quality infrastructure assets and a larger universe of buyers able to transact."
That momentum has accelerated through the early part of this year. The company has already secured $850 million in asset sales ($200 million net to its balance sheet). Brookfield has several more sales in the pipeline. That drives its view that it can deliver $5 billion to $6 billion of asset sale proceeds over the next two years.
Those sales will bolster its liquidity, giving it more flexibility to capitalize on a robust pipeline of investment opportunities. The company has a record backlog of secured capital projects and a significant pipeline of development projects, primarily related to data infrastructure. The company also has a large pipeline of acquisition opportunities.
Brookfield's growth drivers position it to deliver more than 10% annual FFO-per-share growth over the long term. That supports the company's plan to increase its dividend by 5% to 9% per year.
A top-notch dividend growth stock
Brookfield Infrastructure had another strong year. It's in an excellent position to continue growing its FFO and dividend at healthy rates. That makes it a superb stock to buy and hold for an attractive and growing income stream.
