The train has already left the station. If you were hoping to buy shares of Amazon.com (AMZN 1.99%) before the company’s 20-for-1 stock split, you’re too late. The internet giant’s stock is now a lot cheaper than it was at the market close on Friday.
Of course, it’s not too late to still invest in Amazon. The company’s long-term prospects remain very good. But if you have your heart set on trying to fully ride the anticipated wave from a stock split, you won’t have to wait very long. Here’s the next stock-split stock to buy after Amazon.
A less-publicized stock split on the way
Amazon’s stock split received major attention from investors. Upcoming stock splits for Alphabet (GOOG 2.13%) (GOOGL 1.99%) and Tesla (TSLA 1.60%) have also been buzz-worthy. However, there’s a less-publicized stock split on the way very soon.
Brookfield Infrastructure (BIP 0.77%) (BIPC -1.58%) plans to conduct a 3-for-2 stock split on June 10. Technically, two stock splits are coming. Brookfield Infrastructure Partners trades under the ticker BIP, while Brookfield Infrastructure Corporation is listed under the ticker BIPC. They share the same underlying business, though. And both stocks will have identical splits at the same time.
I made the case recently that Brookfield Infrastructure is the perfect stock-split stock for the wild market we’ve experienced so far this year. My reasoning is partly based on performance. Both Brookfield Infrastructure stocks are in positive territory in 2022 and are handily beating the S&P 500.
None of the other highly publicized stock-split stocks are performing nearly as well as Brookfield Infrastructure. Shares of Amazon and Alphabet are down more than 20% year to date. Tesla stock has plunged more than 30%.
An income investor’s dream
If you’re an income-seeking investor, you’ll probably love Brookfield Infrastructure. The company has increased its distribution (equivalent to a dividend) by a compound annual growth rate (CAGR) of 10% since 2009.
The dividend yield for limited partnership BIP currently stands at nearly 3.5%. BIPC’s dividend yield is a little over 3%. The different yields are a result of the different share prices of the two stocks, but the distribution amount is the same for both.
You shouldn’t have to worry about the reliability of Brookfield Infrastructure’s distributions. The company’s portfolio includes cell towers, data centers, natural gas pipelines, electricity transmission lines, railroads, and more. These infrastructure assets generate a solid cash flow stream month in and month out. Around 90% of the company’s cash flow is regulated or contracted with roughly 70% indexed to inflation.
Brookfield Infrastructure expects to increase its distribution between 5% and 9% annually over the long term. I don’t think that goal will be too difficult to achieve considering the strength of the company’s business.
Solid growth prospects, too
This isn’t just a stock that income investors will like, though. Brookfield Infrastructure has solid growth prospects, too.
The company has delivered a 13% revenue CAGR since 2017. One key to this growth is Brookfield Infrastructure’s capital recycling strategy. It buys infrastructure assets at attractive valuations. The company then enhances the value of those assets by improving operations. And when assets mature, Brookfield Infrastructure often sells them.
An infrastructure super-cycle is underway. The U.S. is investing in a major infrastructure upgrade. Global data usage is skyrocketing, boosting the need for more telecom towers and data centers. Brookfield Infrastructure should directly benefit from this super-cycle.
The impending stock split probably won’t provide a huge catalyst for Brookfield Infrastructure. Both of its stocks are already affordable with share prices well below $75.
But while investors shouldn’t have great expectations for the stock split, it’s a different story for Brookfield Infrastructure’s opportunities. BIP and BIPC could each deliver tremendous total returns over the long term.