Yahoo Finance 1 Warren Buffett-Inspired Canadian Stock to Scoop Up
To pass the Warren Buffett test, a business must have a durable competitive advantage and a wide moat. A true ?Buffett? inspired business must have an impressive track record of earnings growth as well as dividend growth over the past decade. The business must also have a predictable stream of future cash flows, and if possible, be in a simple and predictable industry that the general public may refer to as a ?boring?.
Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP) owns and operates utilities, transport, energy, communications, and freehold timberlands around the world. The company is one the most diverse global infrastructure plays in the world, and the management team is determined to further strengthen its moat by making strategic acquisitions.
The company?s assets have a whopping US$21.3 billion book value as of the end of 2016. Brookfield Infrastructure?s moat of assets is gigantic, and it?s growing quite fast. It would be near impossible and incredibly expensive for a competitor to build their own infrastructure in Brookfield Infrastructure?s area of operations.
Not to mention that local government restrictions would probably prevent such a move from happening, even if a competitor did have the capital. Simply put, Brookfield Infrastructure?s moat is extremely wide, and this makes for a very stable cash flow stream.
Growth by acquisition to fuel long-term dividend growth
The management team is determined to increase its long-term cash flow by making strategic acquisitions of businesses priced at a discount to their underlying assets. The management team is focused on delivering long-term value to shareholders and is not going to make a deal just for the sake of increasing the short-term stock price.
Brookfield Infrastructure has grown its dividend by a huge amount over the past few years. The company?s objective is to provide a stable dividend for shareholders while obtaining annual dividend growth between 5-9%.
Brookfield Infrastructure made many huge moves last year including the acquisition of Asciano Ltd., and Australian rail and port operator, for US$6.55. The company also bought a 90% stake in the Brazillian natural gas pipeline for US$5.2 billion. Brookfield Infrastructure also made many new ventures in the foreign markets Peru and India.
That?s a lot of acquisition activity which will boost long-term free cash flow and allow for more generous annual dividend increases for many years to come.
Valuation
Brookfield Infrastructure currently trades at a 36.2 price-to-earnings with a 3.2% dividend yield. It?s definitely not cheap, but you?re paying for high-quality assets located around the world. The dividend isn?t extraordinarily high, but it?s definitely solid and will be growing by a huge amount over the next decade.
The stock isn?t cheap right now, so I?d recommend buying a small chunk now with the intention of buying more on any signs of weakness.
Stay smart. Stay hungry. Stay Foolish.
36-Year Old CEO Bets Over $300 Million on 1 Stock
Iain Butler, Lead Adviser of Stock Advisor Canada, recommended this little tech darling to thousands of loyal members last March... and those that followed his advice are up 127.7% (they've already made 2X their money!).
Not to mention this tiny Eastern Ontario company has already been recommended by both Motley Fool co-founders, David and Tom Gardner, because of its amazing similarity to an "early stage" Amazon.
Find out why Tom Gardner was recently on BNN's Money Talk raving about this company, and how you can read all about it inside Stock Advisor Canada. Click here to unlock all the details about his Canadian rule breaker!
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Fool contributor Joey Frenette has no position in any stocks mentioned.
36-Year Old CEO Bets Over $300 Million on 1 Stock
Iain Butler, Lead Adviser of Stock Advisor Canada, recommended this little tech darling to thousands of loyal members last March... and those that followed his advice are up 127.7% (they've already made 2X their money!).
Not to mention this tiny Eastern Ontario company has already been recommended by both Motley Fool co-founders, David and Tom Gardner, because of its amazing similarity to an "early stage" Amazon.
Find out why Tom Gardner was recently on BNN's Money Talk raving about this company, and how you can read all about it inside Stock Advisor Canada. Click here to unlock all the details about his Canadian rule breaker!
Fool contributor Joey Frenette has no position in any stocks mentioned.
