ASX All Ords stock Dalrymple Bay Infrastructure Ltd (ASX: DBI) has long track record of outperformance.
Atop its market-beating share price gains, the infrastructure company – which owns the Dalrymple Bay Coal Terminal (DBCT) in Queensland – is also popular among passive income investors for its quarterly dividend payouts.
Now this isn't an investment that's likely to double your money in a year.
But with history as our guide, the ASX All Ords stock can do so given a bit of time.
Here's what I mean.
Over the past 12 months, the All Ordinaries Index (ASX: XAO) has gained 8.0%.
Over this same time, Dalrymple Bay shares have gained 31%, closing yesterday trading for $4.38 apiece.
And that's not including the 23 cents a share in partly franked dividends Dalrymple Bay shares delivered to eligible stockholders over the full year.
At yesterday's closing price, Dalrymple shares are trading on a partly franked trailing dividend yield of 5.25%.
Looking ahead, the team at Macquarie Group Ltd (ASX: MQG) believe the company is well-positioned to keep outperforming.
ASX All Ords stock tipped to outperform
Many companies struggle to pass on the rising costs associated with inflation to their customers.
But Dalrymple is in a strong position there.
"DBI is a unique infrastructure business, with a predictable base income growing with inflation," Macquarie noted.
And the broker expects that the ASX All Ords stock will be able to increase its dividend payouts by 5% every year amid a strong earnings growth forecast.
According to Macquarie:
Replacement/new (NECAP) investment of ~$0.7bn becomes the near-term growth driver in the next five years, adding ~27% to EBITDA, which comfortably translates to 5% pa sustainable dividend growth.
Looking further ahead, the broker added:
Re-contracting with miners in CY31 could see DBI move from the current light-handed regime to an unregulated regime, where it can price relative to alternative ports like NQXT [North Queensland Export Terminal]; this could bring material upside (+$1.00/ ps).
Even if the current regime continues, there is scope to reprice access to reflect higher bond rates compared to 2022 (+$0.26/ps), and recovery for future remediation costs.
Macquarie has an outperform rating on the ASX All Ords stock, explaining, "We think DBI is a unique investment with dividend growth of 5% and a valuation EV/EBITDA multiple of 13x, which is below comparable port multiples."
The broker added, "Main upside event is 8X development [planned expansion of DBCT], and medium-term repricing to capture more of the difference between NQXT and DBCT."
Connecting the dots, Macquarie has a 12-month price target of $4.91 per share for Dalrymple Bay. That's 12% above Tuesday's closing price. And it doesn't include those four upcoming dividends.
