When it comes to investing, if I had to choose just one stock to buy and hold, it would need to meet two critical criteria: a solid, recession-proof business and the ability to generate a growing income without requiring me to sell shares. After all, if a stock doesn’t provide income, I’d be forced to sell shares during market downturns, potentially locking in losses and shrinking my wealth permanently.
That’s why Brookfield Infrastructure Partners L.P. (TSX:BIP.UN) is my top choice. Let me explain why this stock would be my “forever” pick.
A resilient business with growing income
Brookfield Infrastructure Partners is a globally diversified utility company with a strong portfolio of essential infrastructure assets across sectors like utilities, transport, midstream, and data. This diversity makes the business resilient, even during economic downturns. Brookfield’s cash flow remains stable through market cycles, ensuring that it can continue to increase its cash payouts year after year.
Since its inception, Brookfield Infrastructure has consistently raised its cash distribution, and it’s been doing so for 17 years. That’s 17 years of growing income for investors! For context, the company’s cash distribution growth rates over the past three, five, and ten years were 6.0%, 6.1%, and 7.7%, respectively.
Over the last decade, the average yield has been around 4.4%. Currently, it offers a yield of just under 5.2%, which suggests the stock is trading at a discount. Analysts also estimate the stock is undervalued by about 18%, which represents a potential upside of roughly 21%.
Strong fundamentals and sustainable growth
Brookfield’s cash distribution is supported by its funds from operations (FFO), which have grown at a compound annual growth rate of 13% over the past decade. The company has maintained a steady FFO payout ratio, averaging 70%, and its most recent ratio in 2024 was a sustainable 67%. The business is positioned for continued organic growth, with expected annual FFO growth of 6–9%, driven by inflation-linked price adjustments, volume increases, and reinvested cash flows.
This combination of strong fundamentals and steady growth makes Brookfield Infrastructure an attractive choice for long-term investors looking for both income and capital appreciation.
Volatility creates opportunities
Despite being a top-tier business, Brookfield Infrastructure Partners is not immune to market volatility. For example, in 2022, the stock peaked at $50 per unit, only to lose 44% of its value, falling to around $28 per unit in 2023. However, since hitting that low, the stock has rebounded by 67%, now trading near $47 per unit. This price swing illustrates an important lesson: even the most solid companies are subject to market emotions and short-term volatility.
For investors who understand the business, these fluctuations present opportunities to buy more shares at a discount. You don’t need to catch the stock at its absolute bottom — investing during a market dip is often enough to benefit from the recovery.
In summary, Brookfield Infrastructure Partners L.P. offers everything I look for in a buy-and-hold stock: a resilient business, consistent income growth, and the potential for long-term appreciation. For anyone looking to start or refine their investment portfolio, this is the stock I’d choose to hold onto for years to come.