What do you think of BIP-UN for long term returns in a TFSA?

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Do you think that its BIP-UN’s dividend will keep on consistently rising? If so, I assume that its long term stock price will also likely do well.

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Asked on December 25, 2023 8:13 am
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Hey,
BIP has a targeted distribution growth rate of between 5-9% annually. Given the company has consistently met its stated distribution growth targets, there is no reason to believe the company won't hit them moving forward. The company has been impacted by higher rates and a recent short report, but long-term we are big believers in the entire suite of Brookfield companies - that includes BIP.UN.

Of note, your statement about if the dividend keeps rising then the stock will do well, is not accurate. There is no real correlation between a rising dividend and stock performance. They key is that earnings and cash flows are growing, which in turn will allow them to comfortable raise the dividend. In this case, yes, the stock price is likely to appreciate. The issue with your statement is that sometimes, companies continue raising the dividend when earnings are cash flows are dropping. This can be an issue of the long-term and eventually, could lead to a divided cut and/or share price underperforming.

In essence, a growing dividend is not the catalyst to send the stock price higher over the long-term. Ultimately, it comes down to company's operational and financial performance.

Mat

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Posted by Mathieu Litalien
Answered on December 27, 2023 6:57 am