Bam or BIP?

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Bam or BIP?
considering growth prospects and dividends which do you prefer?

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Asked on November 27, 2023 1:58 pm
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Hey there,

I think both present different opportunities. Personally, I prefer BAM here simply given that it has less headwinds and less capital intensive. BIP has also been the target of a short report, not that there was much validity to it, but that certainly impacted the company.

BIP also has a high debt load and there are concerns about lower spreads on their capital recycling program which would lower their ability to execute. That said, debt is 90% fixed and a 200 basis point increase would only impact 2024FFO by 25M - which is about a 3% hit of Fiscal 2024 estimates - which really isn't that bad. Given that rates seems to be stabilizing and may even drop, this may turn from a headwind to a tailwind pretty quickly.

From a valuation standpoint, both are cheap - BIP moreseo than BAM. To be honest, both are good long-term holds and BIP could move faster if the interest rate situation materially improves, since they've been dragged down as a result. As mentioned however, I do prefer BAM simply because of its business model in this environment.

Mat

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Posted by Mathieu Litalien
Answered on November 29, 2023 5:35 am