Yet another reminder of the sad state of affairs of the nation’s infrastructure: The collapse Monday of a section of the Interstate 75 bridge in Cincinnati that killed one construction worker.

Though crumbling roads, pipes and power grids is a global problem, the U.S. is the best place to invest in infrastructure. This according to two men who should know: Karl Kuchel, chief operating officer, Macquarie Infrastructure Partners, and Mark Weisdorf, founder of Weisdorf Associates and former CEO of J.P. Morgan Infrastructure Investments Group.

These two top bankers laid out the case for the U.S. as the best place for infrastructure investment in a webinar hosted by Privcap Media, which serves private capital investors.

Readers of Global Income Edge know one of our top long-term income investment themes is profits from the huge, rising demand for income-producing infrastructure investments.

There’s a trillion dollars needed for infrastructure investment in the U.S. over the next seven to 10 years, and $400 billion alone will go to regulated utilities, where a large portion will be used for replacing aging coal plants with natural gas power plants, and adding renewable energy sources such as solar and wind. The American Society of Civil Engineers grades the country’s infrastructure a D+.

The need for infrastructure investment has become more pressing in recent years. Weisdorf explained that though he has been speaking to investors around the world about infrastructure for 15 years, the problem has become particularly acute because investment in it stopped as a result of the global financial crisis. I’ve known firsthand about aging infrastructure, having been an adviser on multi-billion dollar energy projects.

The bankers said private investment in infrastructure is surging because many governments don’t have the means to pay for it, and are turning to public/private arrangements with investors. Weisdorf said that over the last two years demand by private investors has increased dramatically because those investors are interested in the income such arrangements generate.

And infrastructure investments have two more things going for them. First, the pool of high-yield investments is shrinking worldwide. And second, infrastructure investments tend not to be linked to the fortunes of the stock and bond markets. This independence means adding them to your portfolio will decrease volatility. These investments are stable because they’re guaranteed by the “public” half of the public/private partnerships, just as muni bonds are backed by the faith and credit of the municipality that issues them.

Weisdorf said stable infrastructure investments have become more attractive to investors given swings in stock markets and low rates on government debt around the world.

Source: Macquarie

The Case for America

Kuchel noted that U.S. infrastructure is attracting not only U.S. investors, but global investors as well.

The U.S. should have many public/private infrastructure investment opportunities given many state governments are facing sizable deficits with no money to put big down payments on infrastructure investments.

That’s why Global Income Edge has developed portfolios that have stakes in the top energy utilities, telecoms and other infrastructure companies around the world.

For subscribers of Global Income Edge, in the next section we profile two new picks that will benefit from the increased investment in U.S. and global infrastructure.

New Additions

To take advantage of increased infrastructure spending in the U.S. as a result of the recovery, we selected U.S.-only Macquarie Infrastructure Company (NYSE: MIC). It should be noted that Macquarie Infrastructure Company is not managed by the webinar participant above, Karl Kuchel, chief operating officer, Macquarie Infrastructure Partners. Kuchel manages Macquarie’s private infrastructure funds in the U.S., where MIC is a U.S. public firm that is managed by the Australian investment bank, Macquarie.

MIC owns and operates four major businesses in the U.S. that generate high, consistent levels of cash due to long-term contracts to supply essential services:

Atlantic Aviation, one of the largest operators of general aviation services, which provides fuel and hanger services to the noncommercial aviation sector—usually high-end personal jets. If you own a Learjet or a Gulfstream, it’s likely been serviced by Atlantic Aviation. This business is benefiting from increased takeoffs and landings out of its operations at 69 airports in the U.S.

International-Matex Tank Terminals (IMTT), one of the largest independent bulk-liquids-terminals companies in the U.S. It owns 10 terminals in the U.S. and has interests in two terminals in Canada. It stores and distributes 45 million barrels of liquids such as petroleum, chemicals and animal oils.

Hawaii Gas, the exclusive provider of a gas utility to the islands of Hawaii, and the largest propane provider to residences and businesses there. This business has almost no competition on the islands, and as a distributor its exposure to price swings in the commodity market is limited.

Macquarie’s Contracted Power unit owns facilities that generate about 96 megawatts (MW) from solar and wind power. The company recently added more power generation when it increased its stake in Idaho Wind Partners (IWP) power-generation project to 72%.

Because Macquarie provides vital services and has long-term contracts, its revenues are stable and insulated against the volatility that comes with an economic downturn. While it’s currently riding high from the improving economy, management has taken steps, such as reducing leverage in its aviation business, to soften the blow if conditions turn sour.

Macquarie yields 5.6% and is a buy up to $77.

Also, there’s a global player ABB (NYSE: ABB) which derives about 50% of its earnings from the developing world. The firm specializes in power-transmission distribution and power-plant automation. It also develops upgrades for power plants and transmission systems. As developing nations continue to build their energy infrastructure, they will turn to ABB.

ABB yields 3.9% and is a buy up to $30.

PORTFOLIO UPDATE

Increasing the Catch

The world’s largest salmon producer and Global Income Edge holding Marine Harvest has grown even larger. The company completed its $125 million deal to acquire Chilean farming company Acuinova.

Acuinova’s assets includes a hatchery, a smolt (young salmon) facility and a primary and secondary processing facility with the potential to produce up to 40,000 metric tons of salmon annually. Marine Harvest expects the new asset to add 15,000 tons of salmon production to its Chile operations in 2015. The represents roughly 27% of the 55,000 it harvested in Chilean waters in 2014.

Not even a month after this acquisition Marine Harvest said it added a 43% stake in Chile’s top salmon producer, AquaChile. The deal will combine its Chilean business with AquaChile and have estimated production capacity of 260,000 tons of salmon and 25,000 tons of tilapia a year.

Marine Harvest will also be given the option from June 2016 to June 2017 to raise its stake to 55% of the joint operation.

Marine harvest believes this is an important step to consolidating the salmon industry where volumes grew roughly 28% in the third quarter compared to the year before. At $4 billion in estimate value in 2014, Chile is the world’s second largest exporter behind Norway.

—Khoa Nyguyen