Brookfield Infrastructure's (NYSE:BIPC) Dividend Will Be Increased To US$0.54

The board of Brookfield Infrastructure Corporation (NYSE:BIPC) has announced that it will be increasing its dividend on the 31st of March to US$0.54. This makes the dividend yield about the same as the industry average at 3.1%.

View our latest analysis for Brookfield Infrastructure

Brookfield Infrastructure Might Find It Hard To Continue The Dividend

We aren't too impressed by dividend yields unless they can be sustained over time. Brookfield Infrastructure is not generating a profit, but its free cash flows easily cover the dividend, leaving plenty for reinvestment in the business. 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.

Looking forward, earnings per share could rise by 52.1% over the next year if the trend from the last few years continues. While it is good to see income moving in the right direction, it still looks like the company won't achieve profitability. The positive free cash flows give us some comfort, however, that the dividend could continue to be sustained.

Brookfield Infrastructure Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. Since 2020, the first annual payment was US$1.94, compared to the most recent full-year payment of US$2.16. This means that it has been growing its distributions at 5.5% per annum 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Brookfield Infrastructure will be very happy to have seen its EPS grow by 52% in just the last 12 months. We always like to see numbers like these going up, but we don't expect them to shoot up forever, especially as the company grows. The company hasn't been turning a profit, but it running in the right direction. If profitability can be achieved soon and growth continues apace, this stock could certainly turn into a solid dividend payer. We do note though, one year is too short a time to be drawing strong conclusions about a company's future prospects.

We'd also point out that Brookfield Infrastructure has issued stock equal to 61% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Brookfield Infrastructure will make a great income stock. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 4 warning signs for Brookfield Infrastructure you should be aware of, and 2 of them make us uncomfortable. We have also put together a list of global stocks with a solid dividend.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.