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Our Top Pick Yields 6.5%

By Khoa Nguyen on December 30, 2015

Our favorite Global Income Edge Best Buy remains Australia-based Macquarie Infrastructure (NYSE: MIC), with its strong and growing dividend, currently 6.5%. As the U.S. economy continues to grow, it’s essential infrastructure services will continue to benefit from this recovery.

The firm owns and operates four major businesses in the U.S.: Atlantic Aviation, which provides fuel and hanger services to the noncommercial aviation sector; International-Matex Tank Terminals (IMTT), one of the country’s largest independent bulk-liquids-terminals companies; Hawaii Gas, the state’s largest liquefied petroleum gas distributor; and Macquarie’s Contracted Power, which owns the natural-gas-fired 512-megawatt (MW) Bayonne Energy Center (BEC) and solar and facilities.

Thanks to recent acquisitions. which include 50% of its IMTT segment it hadn’t already owned and its BEC facility, the company has posted impressive growth in 2015.

In the third quarter, the company reported revenues rose 7.0% to $415.7 million, versus the same period in 2014. Revenues for the first nine months are up 30.9% versus the comparable period in 2014.

Third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) increased 45.6% to $160.3 million mainly as a result of an increase in gross profit. The strong growth is due to the absence of acquisition-related costs that hurt the previous quarters. 

Macquarie realized strong performances from most of its businesses

Atlantic Aviation, which operates at airports all-over the U.S., delivered a strong performance due a pickup in general flight activity.

The acquisition of seven airport operations since April also helped drive increased business.

IMTT, with its acquisition, now has full ownership of more than 45 million barrels of storage capacity as well as ten bulk liquid terminals in the U.S. and two more in Canada.

Contracted Power and Energy’s solar and wind assets of its segment struggled due to lower solar and wind resources in the western half of the U.S., generating FCF of $2.58 million compared to $4.64 million in 2014.

In October, MIC acquired a solar power generation facility in Hawaii that will start operations in mid-2016.

Hawaii Gas’ third-quarter volume of gas sold was flat with the prior year’s quarter but has increased 2.5% year-to-date versus the same nine-month period in 2014 due to continued growth in commercial consumption driven by tourism.

We first spotlighted Macquarie in January and as an income play it hasn’t disappointed, hiking its quarterly dividend recently by 14% compared to last year. While Macquarie’s stock currently trades flat at about $70 with January levels, expect this to improve as investors have bought its shares up at a rate consistent with its dividend growth for the past five years.

With a yield of 6.5%, Macquarie Infrastructure is our #1 Aggressive Buy up to $77.


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