The 10 Best Infrastructure Stocks Today

Upgrading the nation’s infrastructure is a pressing need in the United States. U.S. infrastructure—which includes things like highways, bridges, railroads, and more—is in dire need of investment.

As a result, it is possible that a major upgrade of U.S. infrastructure is imminent. In April, President Trump along with leaders in Congress agreed to pursue a $2 trillion infrastructure plan. If it eventually passes, such an ambitious plan could amount to huge business opportunities.

Naturally, investors might want to know which companies would benefit from a massive investment in U.S. infrastructure.

You can view a preview of our infrastructure stocks spreadsheet below:

PrintExcelCSVCopy

 

Ticker Name Price Dividend Yield Market Cap ($M) P/E Ratio Payout Ratio Beta
ACM AECOM 36.69 0.0 5,783 21.1 0.0 1.07
ADP Automatic Data Processing, Inc. 168.48 1.8 71,812 38.0 68.2 1.07
AEP American Electric Power Co., Inc. 88.80 3.0 43,809 22.2 65.7 0.10
ALX Alexander's, Inc. 369.42 4.8 1,898 34.9 169.2 0.37
AM Antero Midstream Corp. 9.22 6.0 4,581 31.5 188.4 1.03
AMT American Tower Corp. 211.63 1.6 92,228 69.4 109.7 0.34
ANDX Andeavor Logistics LP 32.17 12.8 7,901 12.6 160.2 1.04
APA Apache Corp. 24.36 4.1 9,059 -60.1 -249.6 1.31
AST Asterias Biotherapeutics, Inc. 0.94 0.0 52 -2.5 0.0  
AT Atlantic Power Corp. 2.41 0.0 259 9.0 0.0 0.64
               

The stocks in the table were derived from four infrastructure ETFs: the iShares U.S. Infrastructure ETF (IFRA); the iShares Global Infrastructure ETF (IGF); the SPDR S&P Global Infrastructure ETF (GII); and the ProShares DJ Brookfield Global Infrastructure ETF (TOLZ).

These ETFs include stocks from a variety of industries that support the building and maintenance of infrastructure assets. Industry groups include electric and water utilities, energy infrastructure such as oil and gas pipelines and energy production firms, steel producers, manufacturers of construction machinery, and even regional banks that finance these companies.

In addition to the Excel spreadsheet above, this article covers our top 10 best infrastructure stock buys today, as ranked using expected total returns from the Sure Analysis Research Database.

The following 10 stocks all have expected annual returns above 10%, making them potential buys for dividend growth investors. One of the stocks has a particularly long record of dividend growth, placing it on the list of Dividend Aristocrats, a group of stocks with 25+ consecutive years of dividend increases.

You can download an Excel spreadsheet of all 57 (with metrics that matter) by clicking the link below:

Click here to download your Dividend Aristocrats Excel Spreadsheet List now.

The table of contents below allows for easy navigation.

Table of Contents

 

Infrastructure Stock #10: Arcelor Mittal (MT)

  • Expected Returns: 13.6%

Arcelor Mittal is a giant steel company. It would benefit from an infrastructure spending plan, as steel would surely be used heavily in an upgrade of the nation’s infrastructure assets. ArcelorMittal was founded in 1976 as a steel producer. It has grown rapidly since through a series of acquisitions.

Today, the company has a global presence. ArcelorMittal is headquartered in Luxembourg, and produces nearly $77 billion in annual revenue.

ArcelorMittal is one of the largest steel producers in the world and serves automotive, rail, and construction customers, among others, meaning it would benefit highly from higher infrastructure spending. This is especially true because Arcelor Mittal swung to a $447 million net loss in the most recent quarter, compared with a $1.9 billion profit in the year-ago period.

Revenue declined 4% year-over-year, and the company cut its forecast for global steel demand. As ArcelorMittal is responsible for roughly 6% of the world’s steel production, a major infrastructure spending bill would give the company a much-needed boost.

ArcelorMittal still expects global steel demand to grow in 2019.

Source: Investor Presentation

Furthermore, ArcelorMittal aims to return to profitability with cost cuts and asset sales, including $2 billion in divestments over the next two years. This will also help the company reduce debt.

ArcelorMittal’s earnings history is extremely volatile as steelmakers are highly cyclical stocks. ArcelorMittal has seen boom and bust cycles in the past decade. Due to the aforementioned headwinds, we have lowered our earnings-per-share estimate for this year from $4.50 to $2.35. We expect annual EPS growth of 10.1% through 2024, as the company executes its turnaround plan and benefits from global economic growth.

Still, the current P/E ratio of 6.3x is below our fair value estimate of 7.0x, meaning expansion of the P/E ratio could add 2.1% per year to shareholder returns through 2024. ArcelorMittal stock also has a 1.4% dividend yield, leading to total expected returns of 13.6% per year over the next five years.

Infrastructure Stock #9: Magellan Midstream Partners (MMP)

  • Expected Returns: 14.2%

Like Holly Energy Partners, Magellan is also an energy MLP. Magellan could specifically benefit from a major infrastructure spending bill, because it has the longest pipeline system of refined products, which is linked to nearly half of the total U.S. refining capacity. This segment generates 59% of its total operating income while the transportation and storage of crude oil generates 34% of its operating income.

MMP Refined Products

Source: Investor Presentation

MMP has a fee-based model; only ~10% of its operating income depends on commodity prices. MMP has a market capitalization of $15 billion.

MMP recently reported second-quarter financial results. Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $314.8 million for the second quarter, up 18% compared with $266.6 million in the 2018 second quarter.

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Disclaimer: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of Sure ...

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