This High-Yield Dividend Stock Is Perfectly Positioned to Benefit from $1 Trillion AI Megatrend

Big tech companies, corporations and utilities are on track to spend about $1 trillion in capital expenditures to support AI in the coming years, according to the firm’s estimates. Goldman SachsThis technology requires data centers, semiconductors and A lot ability to learn and generate results.

These investment trends fit into our strengths Brookfield Infrastructure (BIPC 1.61%) (BIP 0.13%)The global infrastructure company operates utilities, gas pipelines and data centers, and is helping build new semiconductor processing capacity. It also has vast access to capital to help other companies support their AI investments.

That’s why, in Brookfield’s second-quarter earnings report, CEO Sam Pollock said, “The growth outlook is very strong as the rapid adoption of AI is driving significant capital investment opportunities across our data, electricity and natural gas sectors.“ That could give Brookfield a lot more fuel to grow its dividend yielding nearly 4.5%.

Built around the three D’s

Brookfield Infrastructure has shaped its portfolio of operating companies to leverage three main investment themes: decarbonization, digitalization and deglobalization. He sold companies that do not comply with the “three “D” AND this capital was recycled for new ones that use one or more of these megatrends.

This strategy could pay big dividends for the company and its shareholders in the years to come. Pollock wrote about the opportunities ahead for Brookfield in his second-quarter investor letter:

Ten years of history of investing in digital infrastructurein combination with our ability to create innovative capital solutions (such as our partnership with Intel), position us to be a leader in artificial intelligence investment. We are in active talks with several leading technology companies which are interested in using Brookfield Infrastructure leading on the market scale and experience. Favorable winds created by the adoption of AI support exponential growth of our global data center platforms supporting large hyperscale systems, as well as our electricity and natural gas infrastructure providers that transport and deliver power to the grid in support increased load requirements.

As Pollock notes, companies are starting to come to Brookfield to help them realize their AI ambitions. They need more capacity and power in data centers, which Brookfield can provide.

It can also provide them with capital solutions, such as a partnership with Intel to help finance the construction of two new semiconductor manufacturing plants in the US These AI investments could boost company efficiency Already solid growth rate.

This Currently expects funds from operations to grow by more than 10% annually in the coming years, driven by inflation-linked increases in interest rates, volume growth, capital projects and acquisitions.

Accelerating growth opportunities

Brookfield has already begun to see some AI-related investment opportunities. Pollock wrote: “Throughout our global data center platforms, we continue to see strong growth in leasing activity across geographies, driven by investments in artificial intelligence and our customers’ demand for greater data processing and storage capacity.“ He then gave some examples.

In Europe, Brookfield expects its platform to grow from its current 300 megawatts (MW) of operational or contracted capacity to more than 725 MW within its existing footprint. The company recently purchased land in Athens, a new market, to support a 30 MW facility with a leading hyperscale Data center client.

Meanwhile, the US data center platform has 235 MW of operational capacity. It recently purchased more land and now has room to expand its capacity to more than 1.1 GW in the coming years.

Data center investments are just a fraction of a $7.7 billion backlog of organic expansion projects. Other notable investments include investments in semiconductors and spending to expand natural gas infrastructure to provide utilities with more gas for generating electricity.

In addition to strong organic growth drivers, Brookfield believes mergers and acquisitions (M&A) will further accelerate growth. The firm sees a healthy global economy and falling interest rates as catalysts for a revival in M&A activity in the second half of this year. Companies need capital to finance their AI investments, which should open up a lot of possibilities new investment opportunities. Brookfield is ideally positioned to capitalize on this opportunity with good access to capital.

Take advantage of AI megatrends

Companies could see about $1 trillion in AI-related capital investment over the next few years. That should benefit Brookfield Infrastructure in several ways, including expanding its data center, energy services and gas infrastructure operations.

In addition, it should open doors to new investment opportunities to partner with companies that need capital or acquire assets from them. This should help accelerate the company’s growth. Already strong growth rate, providing more fuel to increase the high-yield dividend. This growth and income could enable Brookfield to deliver supercharged total returns in the coming years, making it a great way to potentially benefit from the AI ​​investment boom.

Matt DiLallo has positions in Brookfield Infrastructure Corporation, Brookfield Infrastructure Partners, and Intel and has the following options: long January 2025 at $30 call options on Intel, short January 2025 at $30 put options on Intel, short November 2024 at $45 call options on Intel, and short October 2024 at $45 call options on Intel. The Motley Fool has positions in and recommends the Goldman Sachs Group. The Motley Fool recommends Brookfield Infrastructure Partners and Intel and recommends the following options: long January 2025 at $45 call options on Intel, and short August 2024 at $35 call options on Intel. The Motley Fool has a disclosure policy.