Brookfield Infrastructure Partners(NYSE: BIP) stock may have shed nearly 13% value in the first six months of 2024, but it took just one month to reverse all of those losses and some. Units of the master limited partnership rallied 15.1% in July, according to data provided by S&P Global Market Intelligence. Shares of Brookfield Infrastructure Corporation(NYSE: BIPC) gained 15.6% last month.
The infrastructure stock appeared ripe for bottoming after underperforming the S&P 500 in recent months, especially given its consistently strong operational performance. Investors saw an opportunity to buy shares in July ahead of Brookfield Infrastructure's second-quarter earnings, and the company didn't disappoint.
Yet another solid quarter
Brookfield Infrastructure continues to grow its funds from operations (FFO) steadily. After clocking 11% FFO growth in the first quarter, the infrastructure giant reported 10% year-over-year FFO growth for Q2 on Aug. 1. Its 2023 acquisition of the world's largest intermodal operator, Triton International, was a key contributor to second-quarter FFO growth. Brookfield Infrastructure acquires and operates assets across utilities, transportation, midstream energy, and data infrastructure.
Brookfield Infrastructure's backlog grew by 15% year over year to $7.7 billion in Q2. Primary projects include energy pipeline expansions and data center build-out. The company also periodically sells mature assets to reinvest the proceeds opportunistically. In Q2, it monetized assets worth $210 million, bringing its total capital recycling for the year so far to $1.4 billion.
Why Brookfield Infrastructure stock could go higher
Brookfield Infrastructure expects to raise nearly $2.5 billion from asset sales in the coming quarters and believes there will be ample merger and acquisition opportunities in the second half of 2024 to reinvest all that money. That should set the company up for further FFO and dividend growth. Earlier this year, Brookfield Infrastructure raised its dividend by 6%. Between 2009 and 2024, its dividend grew at a compound annual growth rate of 9%. Units of the partnership yield currently 5.4%.
Brookfield Infrastructure is targeting 10% FFO growth and 5% to 9% annual dividend growth in the long term, but it could grow even faster as technologies like artificial intelligence (AI) open up opportunities to deploy capital across data, utilities, and natural gas. In between, any cut in interest rates could propel Brookfield Infrastructure stock as cheaper debt will allow the company to fund more growth projects.
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.
