Many companies that offer high dividend yields tend to experience slower growth and frequently have limited avenues to reinvest in expanding their operations. Consequently, these businesses typically opt to distribute a large portion of their cash flow back to shareholders through dividends.
Yet, Brookfield Infrastructure ( BIPC 0.43%) ( BIP 0.10%) is an exception among most high-yield dividend options. As an international infrastructure operator, it delivers a 4.3% dividend yield—well above the S&P 500's ( ^GSPC -0.32%) 1.2%—while still maintaining strong growth prospects. This uncommon blend of attractive yield and significant growth potential is why I believe Brookfield has the potential to far outpace the S&P 500's returns over the next ten years.
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A strong strategy for growing shareholder value
Since its inception, Brookfield Infrastructure has consistently outperformed the broader market. The company has achieved a 14% compound annual increase in its funds from operations (FFO), which has enabled it to raise its dividend at a 9% compound annual rate. This performance has resulted in an average yearly total return of 13.1%, surpassing the S&P 500’s 11.4% annualized return during the same timeframe.
Brookfield’s approach to enhancing shareholder value is simple: it acquires top-tier infrastructure assets at attractive valuations, then maximizes their performance through operational improvements. The company also expands these operations by pursuing additional acquisitions and investing in growth projects. Over time, Brookfield sells mature assets, redeploying that capital into new opportunities with higher potential returns.
Multiple growth catalysts
Brookfield targets assets that produce reliable and steadily increasing cash flow. Around 85% of its FFO is generated under long-term agreements and government-regulated rate structures, which are either tied to inflation or designed to keep margins protected from inflationary pressures. Simply from inflation adjustments, the company expects to see 3% to 4% annual growth in FFO per share.
On top of this, Brookfield concentrates on infrastructure sectors set to benefit from global trends such as digital transformation, decarbonization, and shifts in global supply chains. These powerful trends are expected to drive consistent volume growth across the company’s platform, which Brookfield projects will add another 1% to 2% to its FFO per share annually.
These trends also create substantial chances for Brookfield to channel its retained cash flow (after dividends, which account for 30%-40% of FFO) into new growth projects. The company currently has a pipeline of over $7.7 billion in projects anticipated to be completed in the next two to three years, with nearly $5.9 billion allocated to data infrastructure—including new data centers and two U.S. semiconductor plants. Brookfield estimates that projects funded from its post-dividend cash flow alone will contribute an additional 2%-3% annual growth in FFO per share.
Brookfield further accelerates its growth by investing proceeds from asset sales into fresh opportunities. For instance, this year it acquired three premier infrastructure assets—Colonial, Hotwire, and Wells Fargo Rail—investing $1.3 billion across them. These investments are expected to provide stable, growing cash flow thanks to inflation-linked rate structures. Such moves, along with future acquisitions, will continue to enhance Brookfield’s growth outlook.
Looking ahead, Brookfield anticipates vast potential for additional investment in high-quality infrastructure businesses over the next decade. The company projects that maintaining, upgrading, and building new infrastructure globally will require an estimated $100 trillion over the next 15 years—over $8 trillion of which will go toward AI infrastructure in the next three to five years. These robust prospects support Brookfield’s confidence in sustaining more than 10% annual growth in FFO per share.
High-powered total return potential
Brookfield Infrastructure gives shareholders a reliable foundation of over 4% annual returns from its dividend, with plans to increase that payout by 5% to 9% each year. Coupled with anticipated FFO per share growth exceeding 10% annually, Brookfield is well-positioned to deliver average yearly total returns in the mid-teens—reinforcing my belief that it will outperform the market significantly in the decade ahead.
