Amid growing economic uncertainties, investors seeking stability and reliable returns could consider investing in fundamentally stable stocks Brookfield Infrastructure (BIPC), Brink’s (BCO), and Balfour Beatty (BAFYY), which offers quality dividends and consistent returns. Read more.
While the robust economic data indicates that the economy is not on the brink of a recession, it might prompt the Federal Reserve to consider another interest rate hike in June’s meeting.
Amid a volatile market backdrop, investors could consider investing in dividend-paying stocks Brookfield Infrastructure Corporation (BIPC), The Brink’s Company (BCO), and Balfour Beatty plc (BAFYY) which seem relatively stable and offer steady returns.
US stocks had a mixed performance on Tuesday, with earlier gains being pared as investors awaited the completion of a debt ceiling deal between House Speaker Kevin McCarthy and President Joe Biden. The proposed deal would raise the debt ceiling until January 2025 and includes spending cuts and deficit reduction measures.
Additionally, the Commerce Department recently reported that the core personal consumption expenditures price index rose 0.4% in April and 4.7% from a year ago, suggesting that price pressures are still lingering in the economy. Moreover, consumer spending increased by 0.8% for the month, as personal income increased by 0.4%.
On the other hand, economists have warned about the risk of a recession due to the central bank’s aggressive interest rate hikes to combat high inflation. Despite that, Fed looks unlikely to cut interest rates anytime soon as inflation is still high and away from the Fed’s 2% target.
In addition, Billionaire investor Cliff Asness recently raised concerns about conflicting signals from stocks and bonds, suggesting a potential scary sell-off in stocks if a recession occurs.
Let’s take a look at the stocks mentioned above:
Brookfield Infrastructure Corporation (BIPC)
BIPC is engaged in the ownership and operation of regulated gas transmission systems in Brazil and of regulated distribution operations in the United Kingdom, as well as electricity transmission and distribution, and gas distribution in Australia. It is a subsidiary of Brookfield Infrastructure Partners L.P. (BIP).
On April 12, 2023, BIPC announced its intention to acquire 100% of the common equity of Triton International Limited (TRTN) in a cash and stock transaction. The deal values TRTN’s common equity at approximately $4.70 billion and reflects a total enterprise value of approximately $13.30 billion.
TRTN is the world’s largest owner and lessor of intermodal shipping containers and is a critical provider of global transport logistics infrastructure, with a fleet of over 7 million twenty-foot equivalent units. The transaction provides BPIC with a high cash yield, downside protection, and a growth platform in the transportation and logistics sector.
On May 3, the board of directors of BIPC declared a quarterly distribution in the amount of $0.3825 per unit, payable on June 30, 2023.
The company pays an annual dividend of $1.53 per share, which translates to a 3.25% yield on the current prices. Its four-year average dividend yield is 2.85%.
BIPC’s revenue increased 23.7% year-over-year to $4.22 billion in the first quarter that ended March 31, 2023. Its consolidated funds from operations grew 7.5% year-over-year to $1.14 billion. The company’s FFO increased 12.4% and 12.5% from the prior-year quarter to $554 million and $0.72 per unit, respectively.
BIPC’s FFO and revenue are expected to rise 13.7% and 7.3% year-over-year to $3.08 per unit and $15.47 billion, respectively, in the current fiscal year 2023.
BIPC has gained 20.9% year-to-date and 11.5% over the past month to close the last trading session at $46.82. Its 24-month beta is 0.53.
BIPC’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
It also has a B grade for Stability and Quality. In the 64-stock Utilities-Domestic industry, the stock is ranked second.
Click here to access BIPC’s ratings for Growth, Value, Momentum, and Sentiment.
The Brink’s Company (BCO)
BCO provides secure transportation, cash management, and other security-related services internationally. The company’s offerings include armored vehicle transportation of valuables, automated teller machine (ATM) management services, network infrastructure, and cash-in-transit services.
On May 4, BCO declared a 10% increase in the regular quarterly dividend on its common stock, from 20 cents per share to 22 cents per share. The dividend is payable on June 1, 2023.
While BCO has a four-year average dividend yield of 1.08%, it pays an annual dividend of $0.88, which translates to a yield of 1.29% on the prevailing price level. The company has grown its dividend payments at a CAGR of 11% over the past three years.
BCO’s non-GAAP revenue increased 10.4% year-over-year to $1,19 billion in the first quarter of fiscal 2023. Its non-GAAP operating profit grew 13.6% from the year-ago value to $127.40 million. The company’s non-GAAP income from continuing operations attributable to BCO amounted to $55 million or $1.16 per share.
Analysts expect BCO’s revenue and EPS to rise 6.7% and 3.1% year-over-year to $1.21 billion and $1.33, respectively in the current fiscal quarter ending June 2023. The company has surpassed the consensus revenue estimates in three of the trailing four quarters, which is impressive.
The stock has gained 27.2% year-to-date to close its last trading session at $66.45. It has a 24-month beta of 0.87.
BCO’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
The stock also has a B grade for Growth and Stability. It is ranked #5 among 41 stocks in the B-rated Outsourcing – Business Services industry.
Beyond what we’ve stated above, we have also given BCO grades for Value, Momentum, Sentiment, and Quality. Get all the BCO ratings here.
Balfour Beatty plc (BAFYY)
Headquartered in London, United Kingdom, BAFYY funds, designs, develops, builds, and maintains infrastructure. It operates through three segments, Construction Services; Support Services; and Infrastructure Investments.
On March 28, BAFYY announced that its Building operations and joint venture partner Metcon Inc., along with Right Build and Varnedoe Construction, had been chosen by the Raleigh-Durham Airport Authority to carry out a phased construction program worth around $650 million at Raleigh-Durham International Airport (RDU).
BAFYY pays an annual dividend of $0.26, which translates to a yield of 3.66% at the current market price. Its four-year average dividend yield is 1.74%. The company has raised its dividend at CAGRs of 23% and 26.9% over the past three and five years, respectively.
During the fiscal year that ended December 31, 2022, BAFYY’s group revenues increased 6.2% year-over-year to £7.63 billion ($9.45 billion). Its gross profit grew 52% from the year-ago quarter to £427 million ($529 million). The company’s profit for the year rose 106.5% year-over-year to £287 million ($355.56 million).
Street expects BAFYY’s revenue to increase 5% year-over-year to $9.66 billion for the fiscal year ending December 2023.
BAFYY has gained 44.8% over the past year and 14.3% year-to-date to close the last trading session at $9.25. The stock has a 24-month beta of 0.69.
It is no surprise that BAFYY has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
BAFYY has an A grade for Growth and Stability and a B for Value. Within the B-rated Industrial – Services industry, it is ranked #7 out of 80 stocks.
In addition to the POWR Ratings just highlighted, you can access additional BAFYY ratings for Sentiment, Quality, and Momentum here.
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REVISED: 2023 Stock Market Outlook >
BIPC shares were unchanged in premarket trading Wednesday. Year-to-date, BIPC has gained 22.40%, versus a 9.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor’s degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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