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TMFLegendPhoenix (30.87)

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September 16, 2011 – Comments (2) | RELATED TICKERS: BAM , BIP

When I started this "stock of the week" project, my hope was to pick up solid companies whose stock price had fallen as a result of the global economic pressures that are affecting the market at large.  The stock price of the company I’d like to talk about this week has been on my watchlist for months, but didn't appear on my "bargain" radar because the price hadn't dropped significantly.  That's not to say the company isn't a great investment for the price.  

My stock pick for this week is Brookfield Infrastructure Partners (Nasdaq: BIP) at roughly $27 / share.

Brookfield Infrastructure Partners globally manages long-life assets in the fields of utilities, timber, transport and energy. They were spun off from their parent company, Brookfield Asset Managers (Nasdaq: BAM), in 2008 to focus on management of infrastructure operations.  Since the spin-off, they have been expanding and acquiring energy, shipping, pipeline and utility companies around the world.  This global footprint of contractual income (46%-N.A., 31%-Aus, 12%-EUR, 11%-S.A) has provided a broad base from which they have been able to resist many of the dips and dives of regional markets.  As a Master Limited Partnership (MLP), BIP's parent company, BAM, retains 41% of the ownership and acts as the general manager of the partnership.

Brookfield Infrastructure Partners has been expanding their infrastructure platform through disciplined acquisitions of electricity & natural gas transmissions and distributions, ports, railroads, airports, timber and other social and industrial infrastructures  (such as hospitals and coal handling facilities).  They have been able to maintain such an aggressive growth strategy due to their relationship with Brookfield Asset Management who is flush with cash, has vast experience with global mergers and acquisitions and can raise the capital necessary to help a struggling holding become profitable again.

While the growth potential of this young MLP is exciting in and of itself, their attractive distribution policy is the icing on the cake.  Their general partner plans to distribute 60%-70% of their funds from operations to unitholders and they're targeting 3%-7% annual distribution growth.  So far, they've made good on their promise, increasing their quarterly distribution from $.265 to $.275 in q1 2010 and then to $.31 in  q1 2011 and once more in q3 2011 to $.35.

 

Let me leave you with an encouraging word a father gave to his novice-investor son, just after he too discovered Brookfield Infrastructure Partners: "You do not yet realize your importance. You've only begun to discover your power."

I should disclose that I bought shares of Brookfield Infrastructure Partners just before I posted this.

2 Comments – Post Your Own

#1) On September 21, 2011 at 1:56 PM, Domeyrock (< 20) wrote:

I like BIP too, Lord Vader!

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#2) On September 28, 2011 at 12:54 PM, TimothyVR (< 20) wrote:

Yes, BIP offers an outstanding opportunity to invest in several countris at one time - and with a large and increasing dividend.

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