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Interest rate-sensitive sectors such as utilities and telcos came off hard in the first three quarters of 2023 as interest rates continued to climb. Once U.S. Fed policy pivoted at the end of the year, many of these stocks have not returned to previous highs. BIP.UN reached more than $50 in May and fell to almost $29 by October. The 42-per-cent drop was solely attributed to interest rates and market sentiment as the fundamentals of the company remained intact. The stock has since rebounded to $42, but we think there is potential for future growth. As serial capital recyclers, BIP continues to successfully buy undervalue assets and sell them at premium valuations. Their ability to sell assets to raise capital to self-fund growth is beneficial at a time where interest rates are elevated. BIP’s assets are diversified by geography and by segment with a much larger pool of opportunity than other traditional utilities. You are also getting paid a five per cent dividend that is growing 5-9 per cent annually with a conservative payout ratio.
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