Brookfield Infrastructure Partners LP, once a star performer, is now the biggest laggard in the S&P/TSX 60 Index this year. The unit price has fallen to five-year lows, down more than 28% in 2023. Rising interest rates have affected dividend-generating stocks, including Brookfield. Analysts remain optimistic about the company's globally diversified portfolio, but its performance is increasingly frail.
Analysts are upbeat about Brookfield Infrastructure Partners LP, but their optimism is at odds with a unit price that slipped toward five-year lows in Toronto this week, turning a former star into the biggest laggard within the S&P/TSX 60 Index this year.
The good news, if you can call it that, is that Brookfield isn’t alone here. Ever since central banks began to raise their keyBarry Schwartz, chief investment officer at Toronto-based Baskin Wealth Management, which holds a small position in Brookfield, said in an e-mail that rising rates are responsible for recent setbacks in all sorts of dividend-generating stocks.
There may be additional factors weighing on the unit price besides competition with bonds. Rising interest rates have raised borrowing costs, adding to concerns about the ability of some highly indebted companies to increase their dividends or Despite these challenges, some analysts have grown more enthusiastic about the investing case as Brookfield’s unit price has fallen, offering hope to rattled investors.
He added that Brookfield enjoys an investment-grade credit rating, with 90 per cent of its debt fixed to terms that average seven years, leaving it less exposed to rising rates than other companies. And it recently had US$2.3-billion in cash available to buy undervalued assets in what the company believes is a “buyer’s market.”
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