AUS
NZ
UK
CA
USA
IND
Summary
- Canada Budget 2021 mentions the term ‘infrastructure’ 150 times.
- Long-term investors can find good returns from infrastructure stocks listed on TSX.
- Brookfield Infrastructure Partners L.P. and SNC-Lavalin Group Inc. are two infra stocks to consider.
The term ‘infrastructure’ holds the key in Budget 2021 presented by Chrystia Freeland on April 19. It finds mention in multiple pages of the document.
From ‘electric vehicle charging infrastructure’ to ‘maintenance of public infrastructure across Canada, including roads, bridges, public transit, community buildings, and water and wastewater projects’, the term is mentioned 150 times.
So, what does the future hold for infrastructure companies and their stocks? Are infra stocks, including Brookfield Infrastructure Partners L.P. (TSX:BIP.UN), and SNC-Lavalin Group Inc. (TSX:SNC), a short-term return buy or a medium to long-term buy?
Let’s take a look at two stocks that might give good returns in the medium to long-term period.
Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)
Brookfield Infrastructure Partners L.P., a Toronto-headquartered limited partnership, has main business interests in acquisition and management of worldwide infrastructure projects.
On January 21, 2021, Brookfield raised gross proceeds of US$200 million. The proceeds will be diverted towards eligible green projects.
The stock price of the company grew by 5.94 per cent year-to-date and over 25 per cent in the last six months. It declared a quarterly dividend of US$0.51on February 3, 2021.
The dividend yield is 3.8 per cent.
In terms of financials, Brookfield reported net income of US$394 million in 2020, up from US$233 million a year ago. Major component of income in year ending 2020 came from newly acquired assets and part disposition by Brookfield of its export terminal in Australia.
Funds from Operations was US$1.45 billion, as compared to US$1.38 billion in 2019.
SNC-Lavalin Group Inc. (TSX:SNC)
SNC-Lavalin Group Inc., a Montreal-based company, has diverse business interests ranging from infrastructure projects to engineering design services.
In April 2021, a joint venture led by SNC-Lavalin was awarded a contract by the U.S. Air Force Civil Engineer Center to provide architect-engineer services. Its Atkin’s business wing has provided services in multiple projects of Department of Defense of the US.
SNC-Lavalin and partners also won a contract for the second phase of the East West Rail Project of the Department for Transport of the UK.
SNC last declared quarterly dividends C$0.02 on March 9, 2021, and currently yields 0.29 per cent.
The stock has advanced by 25.63 per cent YTD.
SNC-Lavalin’s top line plummeted to C$7 million in 2020, from C$7.6 million in 2019.
It reported net loss of C$0.35 million in 2020, as compared to net income of C$2.44 million in 2019. The company, however, had a robust financial position as of December 31, 2020, with cash and cash equivalent holding of C$932.9 million, and net recourse debt (backed by collateral) to EBITDA ratio of 2.1.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.
