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This Top Dividend Stock's $9 Billion Acquisition Will Give It More Fuel to Grow Its High-Yielding Payout
BIPBrookfield Infrastructure Partners(BIP) The Motley Fool·2025-04-05 08:19

Core Viewpoint - Brookfield Infrastructure and its institutional partners have acquired Colonial Enterprises for 9billion,whichownstheColonialPipeline,asignificantassetthatgeneratesstablecashflowfromTexastotheU.S.EastCoast[1][2].Group1:AcquisitionDetails−TheColonialPipelinespans5,500milesandtransports100milliongallonsoffueldaily,includinggasoline,jetfuel,diesel,andheatingoil,essentialfortheEasternSeaboardeconomy[2].−BrookfieldInfrastructureplanstoinvestapproximately9 billion, which owns the Colonial Pipeline, a significant asset that generates stable cash flow from Texas to the U.S. East Coast [1][2]. Group 1: Acquisition Details - The Colonial Pipeline spans 5,500 miles and transports 100 million gallons of fuel daily, including gasoline, jet fuel, diesel, and heating oil, essential for the Eastern Seaboard economy [2]. - Brookfield Infrastructure plans to invest approximately 500 million of equity into the acquisition, representing about 15% of the total equity commitment, with the remainder funded by institutional partners [3]. - The acquisition is from a consortium that includes Shell, KKR, Koch Industries, and CDPQ [3]. Group 2: Financing and Capital Recycling - The investment is financed through capital recycling initiatives, including the recent sale of Brookfield's remaining 25% interest in the Natural Gas Pipeline Company, generating over 900millioninproceedsoverthepast18months[4].−Brookfieldaimstoraisenearly900 million in proceeds over the past 18 months [4]. - Brookfield aims to raise nearly 900 million from capital recycling initiatives this year, targeting 5billionto5 billion to 6 billion in asset sales over the next two years to fund new opportunities [5]. Group 3: Growth Strategy - The company has a robust pipeline of early-stage capital deployment opportunities, with a large backlog of organic capital projects, including U.S. semiconductor manufacturing and global data center developments [6]. - Brookfield expects organic growth catalysts to drive 6% to 9% annual growth in funds from operations (FFO) per share, while accretive acquisitions could boost FFO per-share growth above 10% per year [6]. Group 4: Dividend Growth - The increasing cash flow from the acquisition will support Brookfield's target to raise its high-yielding dividend by 5% to 6% annually, having already increased it by 6% earlier this year [7][8]. - The company has a history of raising its dividend for 16 consecutive years, indicating a strong commitment to returning value to shareholders [7].