On Monday (August 5th), the US stock market experienced a global sell-off, while the TSX was closed for Civic Holiday. Infrastructure stocks, including Brookfield Infrastructure Partners (NYSE: BIP), Brookfield Renewable Partners (NYSE: BEP), and NextEra Energy (NYSE: NEE), showed resilience amidst the overall market slide on the US exchange.
Brookfield Renewable’s stock has dropped nearly 10% on the TSX this year, presenting a good opportunity for investment at its current price.
NextEra Energy integrates traditional utility assets with continuously growing renewable energy supply. The company recently announced robust quarterly performance and plans to increase dividends at a rate of approximately 10% annually over the next two years.
As of 1:05 PM Eastern Time on Monday, Brookfield Infrastructure and Brookfield Renewable stocks declined by 0.4% and 2% respectively on the US exchange. The utility and clean energy company, NextEra, saw a 1.6% decrease in its stock price. In comparison, the S&P 500 index was down by 2.7% at the same time.
Monday’s overall decline in the US stock market occurred following a strong upward trend earlier in the year. A market correction after substantial gains could be beneficial. The triggering factors appear to be actions by the Bank of Japan and associated “arbitrage trading” effects. However, the market downturn primarily affected the surging tech stocks.
Both Brookfield Infrastructure and Brookfield Renewable recently reported their second-quarter earnings. These reports confirm continued growth in their core businesses. Brookfield’s global asset portfolio includes transportation, utilities, energy transmission and storage, as well as data transmission. Brookfield Infrastructure also holds data center assets that support power supply for the company’s sister entities. Brookfield Renewable reported a 9% year-over-year increase in free cash flow for the second quarter.
Monday’s market performance indicates that owning stocks of certain key asset owners may help offset the impact of sharp declines in growth stocks during high volatility periods.
