The perfect stock split for this wild market (hint: it’s not Amazon or Tesla)

If there were an investing version of Paul Revere today, he might be going for a spin and proclaiming, “Stock splits are coming!” Several major companies are preparing to do stock splits soon.

Amazon (Amazon 3.66%) Shareholders recently voted in favor of a 20-to-1 stock split scheduled for June 3, 2022. Tesla (Tesla 7.33%) announced intention stock split this year. However, the details of the plan have not been released. Shareholders will need to approve the split.

These are just two examples in the wave of stock splits. But there is one stock about to split that is a perfect fit for this market. It’s not Amazon or Tesla.

A power line with two workers is shown in silhouette.

Image credit: Getty Images.

flying under the radar

Unlike Amazon and Tesla, Brookfield Infrastructure (BIP 0.48%) (BIPC -0.96%) Not a household name. The company’s market cap is a fraction of those of the two giants. However, there’s a good chance your life will be impacted by Brookfield Infrastructure unknowingly.

The company is one of the world’s largest operators of infrastructure assets. Brookfield Infrastructure’s product portfolio includes communications towers, data centers, transmission lines, fiber optic cables, natural gas pipelines, natural gas storage facilities, natural gas processing plants, railroads, toll roads, and more.

You can invest in Brookfield Infrastructure in a few different ways. The company was originally organized as a limited partnership (LP) under the ticker symbol BIP (Brookfield Infrastructure Partners). However, to attract more investors who might be reluctant to buy LP shares, the company formed Brookfield Infrastructure Corporation in 2019 under the ticker symbol BIPC.

BIP and BIPC have the same underlying business. Both stocks are scheduled for a 3-for-2 stock split on June 10, just days after Amazon’s stock split.

Ideal for times like this

Many stocks were hit hard as the broader market fell. However, Brookfield Infrastructure is doing pretty well and is actually up to date.

While inflation is a huge concern for many companies, Brookfield Infrastructure is largely immune to the negative impact. About 70% of its funds from operations (FFO) benefit from contractual or regulatory adjustments for inflation.

Higher oil and gas prices could even help Brookfield infrastructure. “The current pricing environment should have a positive impact on the market-sensitive 20% of our midstream sector revenue,” the company said in a recent investor presentation.

But even if inflation and energy prices plummet, Brookfield Infrastructure will almost certainly succeed. A global infrastructure supercycle is underway. Swiss Re estimates that by 2040 it will need to invest US$80 trillion to renew global infrastructure. This creates many opportunities for Brookfield Infrastructure.

pay

There’s another big reason why investors like Brookfield Infrastructure so much right now — its distribution. BIP dividend yield more than 3.5%. BIPC pays the same distribution, but its yield of 2.85% is lower than that of BIP due to the share price difference.

Since 2009, Brookfield Infrastructure’s distribution volume has grown at a compound annual growth rate of approximately 10%. The company expects its distribution volume to increase by 5% to 9% annually in the long run.

These allocations have a significant impact on investors. Shares in BIP have nearly tripled in the past 10 years.However, its total return, including dividend reinvestment, of nearly 360% exceeded S&P 500.

Brookfield Infrastructure may not deliver the sizzling long-term returns that Amazon and Tesla have in the past. However, it’s poised to continue rewarding investors with growth and a dividend. You’ll be hard-pressed to find stocks with better splits for today’s wild markets.