Top Monthly Dividend Stock You Likely Haven’t Considered
Everyone knows that infrastructures are the foundation of modern society. But did you know that they can also play a significant role in boosting the return of an income portfolio?
Today, we are going to take a look at an infrastructure investment that provides a rock-solid yield of 7.64%.
I’m talking about Brookfield Global Listed Infrastructure Income Fund (NYSE: INF), a closed-end fund that started in 2011. Since its inception, the fund’s main objective is to provide high total returns with an emphasis on income. And as the fund’s name suggests, the way to achieve this objective is through investing primarily in publicly traded infrastructure companies.
In today’s market, INF stock stands out as an income investment. The fund pays monthly distributions of $0.0817 per share, which at the current price, translates to an annual yield of 7.64%.
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Of course, high yield stocks are not always the safest bets, which is why income investors should always diversify. The good news is that the INF fund is not putting all its eggs in one basket. Even though it has a focus on infrastructure, the fund’s portfolio is actually quite diversified.
As of September 30, 2017, Brookfield Global Listed Infrastructure Income Fund held investments in 46 infrastructure companies around the world. The U.S. has the most of the fund’s investments at 51.7% of assets, followed by Continental Europe (17.3%), Canada (12%), and the U.K. (8.3%). (Source: “Fact Sheet,” Brookfield Investment Management Inc, last accessed October 24, 2017.)
Other than having a global investment platform, INF fund also diversifies across different sectors. Its portfolio companies include master limited partnerships, pipelines, toll roads, airports, and utilities, just to name a few. The fund’s top three holdings are TransCanada Corp (TSE:TRP), Vinci SA (EPA:DG), and American Tower Corp (NYSE:AMT). No single company represents more than six percent of INF’s portfolio.
These infrastructure businesses may not seem very exciting, but they can be of great help for investors looking to earn a steady stream of income. The operator of a crude oil pipeline earns a fee for every barrel of crude that goes through its network. And every time people turn their lights on, they are paying money to the electric utility.
Whether it’s an oil pipeline or an electric grid, these infrastructures are extremely costly to build. But once up and running, the cost of operations is quite minimal. In other words, many infrastructure companies are essentially running cash cow businesses.
At the same time, these industries are heavily regulated, meaning if one set of infrastructure is put in place, it’s almost impossible to build another one running side by side. As a result, infrastructure companies–including many in INF fund’s portfolio–can enjoy monopoly status in their operating regions. Therefore, they can generate oversized cash flows year after year. And that’s why they are great for an income portfolio.
Good Value for Your Money?
As investors searched for yield, the prices of the most well-known high dividend stocks–and especially the monthly dividend payers–have gotten quite expensive. But because the INF fund is not really a popular name, it actually represents a good value for the money right now.
The fund currently trades at $12.84 apiece while having a net asset value of $14.58 per share. That translates to a discount of 11.93%.
With a solid portfolio, a handsome yield, and monthly distributions, the INF fund could be an income opportunity at the current price.