My Highest Conviction High-Yield Dividend Stock to Buy in December

• Brookfield Infrastructure Partners pays a precise bankable, high-yielding dividend.

• The institution expects its already above-average maturation complaint to accelerate successful the coming years.

• It trades astatine a ungraded inexpensive valuation.

• 10 stocks we similar amended than Brookfield Infrastructure Partners ›

I ain dozens of stocks that presently wage high-yielding dividends. They're halfway to my strategy for generating passive income, which I presumption arsenic my summons to achieving fiscal independence. I person precocious condemnation that each 1 tin proceed to nutrient a increasing watercourse of dividend income for my portfolio.

However, my highest condemnation presumption is Brookfield Infrastructure Partners (NYSE: BIP). I judge that it has the imaginable to nutrient the highest total returns (dividend income positive banal terms appreciation) among my income stocks implicit the adjacent 5 years. Here's what drives my view.

Brookfield Infrastructure Partners presently yields 5%, which is meaningfully higher than the S&P 500's 1.1% output and the 3.7% output of its economically equivalent firm twin, Brookfield Infrastructure Corporation (NYSE: BIPC). While the limited partnership sends a Schedule K-1 Federal Tax Form each twelvemonth alternatively of the Form 1099-Div the corp provides, I deliberation the other paperwork is good worthy the further income.

Both entities screen their high-yielding payouts with ease. Brookfield generates precise unchangeable currency flow, with 85% of its yearly funds from operations (FFO) backed by semipermanent contracts and government-regulated frameworks. Meanwhile, it has a blimpish dividend payout ratio, which it expects to beryllium astir 67% this year, good wrong its people scope of 60%-70%. That provides it with a comfy cushion portion enabling it to clasp immoderate currency to money its enlargement initiatives.

Brookfield besides has a beardown equilibrium sheet. It has a coagulated investment-grade credit rating (BBB+) and a steadfast liquidity level that it routinely refreshes done its capital recycling strategy.

While I emotion Brookfield Infrastructure Partners' rock-solid, high-yielding dividend, it's acold from the company's lone draw. It's besides increasing astatine an above-average rate. Brookfield Infrastructure has grown its FFO per stock astatine a 10% compound yearly complaint implicit the past 5 years and astatine a 14% compound annual complaint since inception (2009).

It's in a beardown position to present maturation toward its humanities 14% mean successful the future, easily supporting its plans to summation its high-yielding payout by 5% to 9% per year. It has grown briskly implicit the past 5 years, contempt headwinds from a prolonged play of a beardown U.S. dollar and higher borrowing costs due to higher involvement rates. Those headwinds could displacement into tailwinds successful the coming years arsenic involvement rates autumn and the dollar perchance weakens.