Brookfield Infrastructure (NYSE: BIPC) (NYSE: BIP) recently reported record second-quarter results. The global infrastructure operator's funds from operations (FFO) surged 30%. Although a needle-moving acquisition was the primary driver, the company also benefited from elevated inflation, which allowed it to increase its contract rates.
Brookfield's inflation -driven growth bodes well for its dividend. The company aims to grow its payout, which currently yields 3.1%, by 5% to 9% per year. With inflation fueling organic growth above the top end of its annual target range, Brookfield could grow its payout at a high-end rate in the coming years if inflation remains high.
Long-term contracts and government-regulated rate structures support about 90% of Brookfield Infrastructure's earnings. Most of these contracts have escalation clauses enabling Brookfield to boost rates at the pace of inflation. Overall, 70% of its earnings grow alongside inflation.
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This High-Yield Dividend Stock Is Getting a Big Inflation-Driven Boost