Macquarie Infrastructure Corp (NYSE:MIC) has outperformed the S&P 500 in the last 10 years. However, it has underperformed the S&P 500 since October.
Macquarie Infrastructure is managed externally by a professional team and its performance is dependent on the 4 diversified businesses it owns and subsequent investments. At under $64, the company yields 7.2%.
MIC has increased its dividend for 6 consecutive years and 10 consecutive quarters. Its 3-year distribution growth rate is 36.2%. While that might jump out to some investors, its last quarterly dividend was “only” 12.7% higher than a year before.
Shareholders may be concerned about the high fees paid to MIC’s external manager in the sense that more paid to the manager implies less paid to shareholders in distributions. However, MIC’s guidance for its 2016 dividend growth is still about 16% higher than its 2015 distribution.
A holding company
Macquarie Infrastructure holds four businesses:
- International-Matex Tank Terminals [IMTT] is a regional distribution centre for refined products, storing and handling bulk liquids at 10 marine terminals in the U.S. and 2 in Canada
- Atlantic Aviation provides fuel, terminal, and aircraft hangar services in 69 airports in the United States
- Contracted Power and Energy controls interests in gas-fired, wind, and solar power facilities in the U.S.
- Hawaii Gas processes and distributes gas in Hawaii
Macquarie Infrastructure generates most of its EBITDA from IMTT and Atlantic Aviation, so the company’s performance is more dependent on the well-being of those businesses than the other two.
Why has MIC underperformed recently?
Macquarie Infrastructure has underperformed against S&P 500 since October 2015 likely due to its recent investments and announcement of other growth investments which always come with risks. The most unlikely blow to its share price was an erroneous online article in February that led investors to believe that MIC’s Q4 2015 dividend was reduced.
This is mainly an excerpt. To find out more about Macquarie Infrastructure, read the Seeking Alpha article here: Is Macquarie Infrastructure Corp A Buy?
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Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
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