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What are we looking for?

Sustainable dividends from private equity players on the hunt for lucrative infrastructure deals.

The screen

BlackRock Inc.’s US$12.5-billion deal to buy Global Infrastructure Partners is the investment giant’s biggest acquisition in 15 years. The purchase encompasses the energy, transportation, digital, water and wastewater assets of the New York-based firm – including Global Infrastructure’s stake in London’s Gatwick Airport.

Privately owned infrastructure projects offer a lot of plusses, while their large-scale and heavy development costs form high barriers to entry for would-be competitors.

BlackRock and others are in pursuit of stable cash flows, typically backed by long-term contracts between governments and the private infrastructure owners.

Our search started with dividend-paying Canadian and U.S. private equity firms well positioned to gain from infrastructure’s steady returns. From there, we applied our TSI Dividend Sustainability Rating System, awarding points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow to cover dividends;
  • One point if the company is an industry leader.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Private equity firms with attractive dividends

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Bil.)**1Y Ttl. Rtn. (%) Recent Price ($)**
1Brookfield Corp.BN-TAbove Average90.781.78.852.01
2Carlyle Group Inc.CG-QAbove Average83.613.815.038.61
3Blackstone Inc.BX-NAbove Average82.8143.036.2116.98
4BlackRock Inc.BLK-NAbove Average82.6117.75.0787.43
5KKR & Co. Inc.KKR-NAbove Average80.872.251.781.20
6Onex Corp.ONEX-TAbove Average80.47.340.796.00
7Ares Management Corp.ARES-NAbove Average72.735.948.1115.69
8Apollo Global Management Inc.APO-NAbove Average71.854.239.096.06

Source: Dividend Advisor.

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

**Share price and market cap are in native currency

Our TSI Dividend Sustainability Rating System generated eight stocks. Canada’s Onex Corp. ONEX-T has a long track record of success in private equity deals. This country’s other titan in private equity markets, Brookfield Corp. BN-T, also based in Toronto, controls a range of assets globally, including infrastructure. Meanwhile, KKR & Co. Inc. KKR-N, Blackstone Inc. BX-N, BlackRock Inc. BLK-N and Apollo Global Management Inc. APO-N, all based in New York, as well as Washington-headquartered Carlyle Group Inc. CG-Q, and Los Angeles-based Ares Management Corp. ARES-N, are all leading global private equity players with lots of dry powder to take advantage of attractive long-term opportunities in private infrastructure. (Note: the meagre dividend yields of Onex Corp. KKR & Co., and Brookfield Corp. reflect their rapid share price rise over 2023.)

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 19/04/24 4:00pm EDT.

SymbolName% changeLast
Onex Corp
The Carlyle Group
Brookfield Corporation
KKR & Company LP
Blackstone Inc
Blackrock Inc
Apollo Asset Management Inc
Ares Management LP

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