My Top High-Yield Dividend Stock for December: Brookfield Infrastructure

As the year winds down, investors are looking for reliable, high-yield dividend stocks to add to their portfolios. One standout choice is Brookfield Infrastructure (BIPC, BIP), a global leader in utilities, energy midstream, and transportation assets, with a robust and sustainable dividend. Here's why Brookfield Infrastructure is my highest conviction high-yield dividend stock to consider in December.

Brookfield Infrastructure's investment-grade balance sheet and cash flow management support its high-yielding dividend, currently over 3.5%. The company pays out 60-70% of its stable cash flow in dividends while retaining the rest for expansion projects. This strategy, coupled with 90% of its funds from operations (FFO) backed by long-term contracts and government-regulated rate structures, ensures dividend sustainability.

The company's strong dividend growth prospects are driven by its evolving portfolio and exposure to economic megatrends. With 60% of its FFO linked to digitalization, Brookfield Infrastructure is well-positioned to capitalize on the burgeoning AI infrastructure market. The company's record backlog of nearly $8 billion in organic growth projects, including $5.5 billion in data-related investments, supports this growth narrative.

Brookfield Infrastructure's strategic acquisitions and mergers have been instrumental in driving its dividend growth and overall returns. The company's approach to mergers and acquisitions focuses on buying high-quality assets that generate stable cash flows, often with long-term contracts and regulated rate structures. These acquisitions help to diversify Brookfield's portfolio, reducing exposure to commodity price fluctuations and economic cycles.

Furthermore, Brookfield Infrastructure's dividend is indexed or protected from inflation, which contributes to its sustainability and growth. With 85% of its FFO either indexed to or protected from inflation, the company can maintain and grow its payouts even in an inflationary environment.

In conclusion, Brookfield Infrastructure's stable and high-yielding dividend, supported by a strong balance sheet and cash flow management, makes it an attractive choice for investors seeking robust total return potential. The company's exposure to economic megatrends, strategic acquisitions, and dividend protection from inflation position it well for continued dividend growth and appreciation.