If there was an investing version of Paul Revere today, he might ride around proclaiming, “The stock splits are coming!” Several big companies are poised to conduct stock splits soon.
Amazon (AMZN 3.66%) shareholders recently voted in favor of a 20-for-1 stock split scheduled for June 3, 2022. Tesla (TSLA 7.33%) has announced its intention to conduct a stock split this year. Details of the plan haven’t been revealed, though. Shareholders will need to approve the split.
These are just two examples of the wave of stock splits on the way. But there’s a stock with an upcoming split that’s perfect for this market. And it’s not Amazon or Tesla.
Flying under the radar
Unlike Amazon and Tesla, Brookfield Infrastructure (BIP 0.48%) (BIPC -1.69%) isn’t a household name. The company’s market cap is only a fraction of those two giants’. However, there’s a pretty good chance that your life is unknowingly affected by Brookfield Infrastructure.
The company ranks as one of the largest operators of infrastructure assets in the world. Brookfield Infrastructure’s portfolio includes communications towers, data centers, electricity transmission lines, fiber optic cable, natural gas pipelines, natural gas storage facilities, natural gas processing plants, railroads, toll roads, and more.
You can invest in Brookfield Infrastructure in a couple of different ways. The company was first organized as a limited partnership (LP) with shares trading under the BIP (Brookfield Infrastructure Partners) ticker. However, to attract more investors who might be reluctant to buy shares of LPs, the company formed Brookfield Infrastructure Corporation in 2019, with the shares trading under the BIPC ticker.
BIP and BIPC have the same underlying business. Both stocks are set to conduct a 3-for-2 stock split on June 10, just a few days after Amazon’s stock split.
Ideal for times like these
Many stocks are getting clobbered with the overall market in decline. However, Brookfield Infrastructure is holding up quite well and is actually up year to date.
While inflation presents a huge worry for many companies, Brookfield Infrastructure is largely insulated from the negative effects. Roughly 70% of its funds from operations (FFO) benefit from either contracted or regulated adjustments for inflation.
Higher oil and gas prices can even help Brookfield Infrastructure. The company stated in a recent investor presentation that the “current pricing environment should positively impact 20% of our market-sensitive revenues in our midstream sector.”
But Brookfield Infrastructure will almost certainly be successful even if inflation and energy prices fall quite a bit. A global infrastructure super-cycle is underway. Swiss Re projects that $80 trillion will need to be invested by 2040 to update infrastructure worldwide. This creates lots of opportunities for Brookfield Infrastructure.
There’s also another big reason why investors like Brookfield Infrastructure so much right now — its distributions. BIP’s dividend yield tops 3.5%. BIPC pays the same distribution, but its yield of 2.85% is lower than BIP because of the difference in share prices.
Brookfield Infrastructure has increased its distributions by a compound annual growth rate of around 10% since 2009. The company expects to increase its distributions by 5% to 9% annually over the long term.
Those distributions make a significant difference for investors. Over the past 10 years, BIP stock has nearly tripled. However, its total return including reinvesting dividends is close to 360% — trouncing the performance of the S&P 500.
Brookfield Infrastructure might not deliver the sizzling long-term returns that Amazon and Tesla have in the past. However, it’s poised to continue rewarding investors with both growth and dividends. You’ll have a hard time finding a better stock with a split on the way that’s more perfectly suited for today’s wild market.
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