Priority no. 1 of this magnificent dividend stock is to enrich investors. Here’s how he does it.

Brookfield Infrastructure (BIPC 0.88%) (BEEP 0.48%) recently held its annual investor day. The global infrastructure company highlighted at the event that its top priority is creating value for investors.

It certainly has done that over the years. For example, an investor who purchased 100 shares at inception 15 years ago (an initial investment of $1,900) would now own 225 limited partnership units of Brookfield Infrastructure Partners (BIP) worth more than $7,600 and another 25 of shares of Brookfield Infrastructure Corporation (BIPC) rated. to over $1,060. They would also have received nearly $3,940 in cash distributions (thanks to its magnificent 9% compound annual dividend growth rate). Add it all up and Brookfield has delivered a 6.6x return for investors since its formation a decade and a half ago.

The company is in an excellent position to continue enriching its investors in the future. Here’s a look at the three paths it’s taking to create value for its investors.

1. Built-in organic growth

Brookfield Infrastructure is investing capital to expand its global infrastructure operations. The company at present has $8 billion of guaranteed growth capital projects across its four operating segments (utilities, transportation, midstream and data). Meanwhile, its potential backlog is up to $12 billion.

Its data segment currently represents the biggest portion of it outstanding at 5.5 billion dollars. The largest project is to invest $3.9 billion in equity construction of two US semiconductor manufacturing facilities with Intel. It is also investing $1.2 billion to expand its global data center platform. These investments position it to participate in the next huge growth in semiconductors and AI-driven data center capacity. This technology uses 5x the semiconductor chip power of non-AI workloads and could lead to a threefold increase in data center capacity by 2030.

2. Loan and continuation investments

Brookfield Infrastructure also expands its revenue from existing businesses by making follow-on investments to increase its interest in those businesses and making integrated acquisitions to expand them. For example, in 2013 the company and its partners bought a 27% interest in a Brazilian rail and port logistics business, VLI, with Brookfield investing $350 million in the $850 million deal. It took the opportunity to buy a 10 percent stake in that stock for $365 million this year, at a more than 20 percent discount to its estimated fair business value. This investment will give him a larger share of the cash flows the business produces, while improving governance as he is now the largest shareholder.

Brookfield also made two acquisitions this year. Acquired 40 data center sites FROM bankruptcy of Cyxtera, also buying the real estate associated with several sites from third-party owners to expand its US retail colocation data center platform. It originally formed that platform in 2018 when it bought several data centers from AT&T. The company also acquired a portfolio of telecom towers in India American Tower to expand its platform in the respective country. This trio of follow-on and embedded deals will add about $150 million annually FFO (funds from operations).

2. Mergers and Acquisitions

Brookfield’s third avenue of growth is cumulative mergers and acquisitions. Will acquire expandable platforms when compelling opportunities arise.

For example, last year he participated in the privatization of Triton International. Brookfield Infrastructure has invested $1.2 billion for a 28 percent interest in the global intermodal logistics operation. The company expects the investment to generate strong returns, with the opportunity to expand its fleet in the future.

The company expects the second part of this year to be active for M&A as the interest rate environment improves. Meanwhile, the long-term M&A outlook is also robust due to the huge need for capital to fund growth across multiple industries. He sees potential opportunities to buy assets from corporations in need of capital (such as buying data centers from AT&T a few years ago). It also sees potential to buy businesses that don’t have enough domestic capital to fund growth, such as electric and gas utilities.

A rewarding investment

Brookfield Infrastructure expects its trio of drivers to grow its FFO per share at an annualized rate of more than 10%. That should give it the fuel to raise its dividend by 5% to 9% per year. With its earnings yield of nearly 4%, the company could deliver an average annual total return in the mid-teens. This positions Brookfield to continue to deliver its top priority of wealth growth for its investors.