The board of Brookfield Infrastructure Corporation (NYSE:BIPC) has announced that it will pay a dividend on the 28th of June, with investors receiving $0.405 per share. This takes the dividend yield to 4.9%, which shareholders will be pleased with.

View our latest analysis for Brookfield Infrastructure

Brookfield Infrastructure's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Brookfield Infrastructure's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS could expand by 97.2% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 31% by next year, which is in a pretty sustainable range.

Brookfield Infrastructure Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of $1.29 in 2020 to the most recent total annual payment of $1.62. This implies that the company grew its distributions at a yearly rate of about 5.8% over that duration. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Brookfield Infrastructure has been growing its earnings per share at 97% a year over the past three years. Brookfield Infrastructure is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

An additional note is that the company has been raising capital by issuing stock equal to 27% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

We Really Like Brookfield Infrastructure's Dividend

Overall, a dividend increase is always good, and we think that Brookfield Infrastructure is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Brookfield Infrastructure has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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