Brookfield Infrastructure (NYSE:BIPC) Is Paying Out A Larger Dividend Than Last Year

Brookfield Infrastructure Corporation (NYSE:BIPC) has announced that it will be increasing its dividend from last year's comparable payment on the 31st of March to $0.43. Based on this payment, the dividend yield for the company will be 4.1%, which is fairly typical for the industry.

View our latest analysis for Brookfield Infrastructure

Brookfield Infrastructure's Distributions May Be Difficult To Sustain

We aren't too impressed by dividend yields unless they can be sustained over time. Even though Brookfield Infrastructure isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

Assuming the trend of the last few years continues, EPS will grow by 32.5% over the next 12 months. We like to see the company moving towards profitability, but this probably won't be enough for it to post positive net income this year. The healthy cash flows are definitely as good sign, though so we wouldn't panic just yet, especially with the earnings growing.

Brookfield Infrastructure Is Still Building Its Track Record

It is great to see that Brookfield Infrastructure has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of $1.29 in 2020 to the most recent total annual payment of $1.72. This works out to be a compound annual growth rate (CAGR) of approximately 5.9% a year over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Brookfield Infrastructure to be a consistent dividend paying stock.

The Company Could Face Some Challenges Growing The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Brookfield Infrastructure has grown earnings per share at 32% per year over the past five years. While the company is not yet turning a profit, it is growing at a good rate. If this trajectory continues and the company can turn a profit soon, it could bode well for the dividend going forward.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Brookfield Infrastructure has 2 warning signs (and 1 which is significant) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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