Got $1,000? This Nearly 4%-Yielding Dividend Stock Could Turn It Into Almost $40 of Annual Passive Income (And Grow Your Investment by 10%+ Each Year).

Brookfield Infrastructure (NYSE: BIPC)(NYSE: BIP) has been a fantastic income-producing investment over the years. The global infrastructure operator has increased its dividend every year since its formation 15 years ago, growing the payout at a 9% compound annual rate. It currently yields nearly 4%, which is very attractive given that the S&P 500's dividend yield is less than 1.5%.

That lucrative passive income stream is only part of the story. Brookfield Infrastructure is growing its funds from operations (FFO) per share at a double-digit rate. Add that to the dividend income, and Brookfield has the power to produce a prodigious total return.

A lucrative and growing income stream

Brookfield Infrastructure recently declared its latest dividend payment of $0.405 per share, which is 6% higher than the year-ago level. At its recent stock price, the company yields about 3.8%. Put another way, a $1,000 investment in Brookfield Infrastructure would produce roughly $38 of annual dividend income.

That lucrative income stream is on a very solid foundation. Brookfield generated $0.76 of FFO per share during the third quarter, pushing its year-to-date total to $2.31. That puts its dividend payout ratio at a comfortable 52% through the first nine months of this year. The company's FFO has grown nearly 7% per share this year, fueled by organic expansion and acquisitions.

Brookfield also has a very conservative financial profile. The company has a strong investment-grade rated balance sheet funded primarily with long-term, fixed-rate debt. Meanwhile, it has lots of liquidity. Brookfield has enhanced its liquidity this year by recycling capital. It recently achieved its 2024 target of raising $2 billion from asset sales. That gives it lots of flexibility to capitalize on new investment opportunities.

Multiple growth drivers

Brookfield is capitalizing on multiple catalysts, which should drive accelerated FFO growth in the coming years. CEO Sam Pollock wrote about them in his third-quarter letter to shareholders:

Our growth profile continues to accelerate, focused around decarbonization and digitalization investment themes. We are also seeing more opportunities for value creation within our existing business and our new investments pipeline. Most notable are the tailwinds created by artificial intelligence (AI) and associated power demand. Our existing platform spans many of the sectors directly benefiting, including our natural gas and midstream infrastructure to our data center, fiber and telecom platforms. We have seen this translate into a 20% increase in our capital backlog in the last twelve months, while providing very attractive project level returns.

The company has a record $8 billion of capital projects underway across its platforms. Notable projects include funding roughly half the cost of building two semiconductor fabrication plants in the U.S. and multiple data center developments worldwide. Add in other drivers like inflation-indexed rate increases and volume growth as the global economy expands, and Brookfield expects to deliver 6% to 9% organic growth in its FFO per share in the coming years.

On top of organic growth, Brookfield expects to continue recycling capital into accretive acquisitions to further enhance its growth rate. The company recently closed on the acquisition of a portfolio of telecom towers in India, significantly enhancing the scale of its global tower platform.

The company expects to close more deals in the coming year. Pollock wrote in the shareholder letter, "Our investment pipeline is as big as it's been in two years, and it continues to grow." Add accretive acquisitions to its solid organic growth rate, and Brookfield anticipates it can deliver 10%-plus FFO per share growth in the future. That also drives its confidence that it can increase its dividend at a 5% to 9% annual rate.

Attractive total return potential

Brookfield Infrastructure pays a nearly 4%-yielding dividend, which gives investors a nice base income return. On top of that, it has robust growth prospects. It believes it can deliver double-digit FFO per share growth, which should support a similar rise in its stock price. Combining the two, Brookfield Infrastructure looks like a very enriching investment opportunity these days.

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Matt DiLallo has positions in Brookfield Infrastructure Corporation and Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.