BBGI Global Infrastructure

Boring is beautiful – and dividend growth continues

07 Sep 2021 / Corporate research

BBGI is a diversified social infrastructure investment company, registered in Luxembourg, and a FTSE 250 constituent. Its portfolio consists of long-term and low-risk essential social infrastructure investments, which deliver stable, predictable cashflows, with progressive dividend growth and attractive, sustainable returns. It focuses on enhancing the value of its investments, which are globally diversified within highly rated investment-grade countries. Most of its investments are via Public, Private Partnerships (PPPs) or derivatives thereof. All of its investments are availability-based, not demand-based, supported by government-backed revenues; hence, the cashflow line is highly reliable.

  • Background: Central to BBGI’s business are its 54 essential, social infrastructure investments; they range from bridges in North America to a hospital facility in Australia. Crucially, BBGI’s equity investment portfolio comprises low-risk and public sector-backed, availability-based infrastructure investments.
  • Operations: BBGI’s main operating jurisdictions are in North America, specifically Canada, and in the UK. Revenues from virtually all of BBGI’s investments are based on their availability, and not on the level of demand for them; hence, there is a bond-like predictability about future revenues.
  • Valuation: BBGI has built up a very successful track record since its IPO in 2011, with total shareholder returns averaging 10.8% per year. It has consistently traded at a premium to NAV; the current premium is an impressive 25.5%. The shares are yielding 4.2%, based on the prospective 2021 dividend.
  • Risks: All BBGI’s cashflows are from government or government-backed bodies, thereby reducing the counterparty risk factor considerably. Owing to the absence of demand-based investments, the impact of COVID-19 on BBGI’s finances and operations has been marginal.
  • Investment summary: In the quest for reliable dividends, institutional and retail investors may well focus on UK infrastructure investment companies (IICs), with their secure dividend profiles. The prospective sector yield is now just below 5%. Following its recent 2021 interim results, BBGI confirmed its dividend targets – 7.33p per share for 2021, 7.48p per share for 2022 and 7.63p per share for 2023.
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