MIDAS SHARE TIPS: Clean up… by backing firm behind ‘super sewer’

According to Rudyard Kipling, real men keep their head while all around are losing theirs. Not an easy ask for men or women when every week brings fresh uncertainties, fresh travails and fresh evidence of folly, particularly from those in positions of power and responsibility.

Some companies, however, have been set up specifically to deliver gains through thick and thin. Ups and downs may arise along the way, but the long-term trajectory is sound, backed by social change, demographic shifts and government commitments from both sides of the House.

International Public Partnerships exemplifies the breed. Floated in 2006, the group invests in projects that are designed to make life better for individuals, communities and businesses, while also generating robust returns for shareholders. To that end, INPP has increased dividends every year since joining the stock market, from 5.25p just after listing to 8.37p in 2024.

Manager Chris Morgan is determined to continue in that vein, targeting a payout of 8.58p this year and 8.79p next.

With the shares at £1.10, that puts the stock on a yield approaching eight per cent, highly attractive to any investor looking for generous yet dependable income.

INPP can afford to make these payments by focusing on areas that are critical to modern life, such as energy and power.

The group owns a slice of Cadent, which supplies gas to about half the UK population. And Morgan has invested heavily in cabling systems that connect offshore wind farms to the mainland, with 11 deals completed to date and more expected in future.

The group’s biggest investment is Thames Tideway Tunnel, a ‘super-sewer’ that has already diverted six million cubic metres of sewage from the river, equivalent to 2,500 Olympic pools.

INPP owns 20 per cent of this project, and regulated revenues stretch into the 22nd century. Schools, police stations and hospitals are part of the INPP portfolio too, alongside trains, courthouses and libraries.

There are more than 140 investments, most in the UK but some in New Zealand, North America and Northern Europe. Crucially, contracts depend on availability rather than usage so, as long as INPP’s assets are in good working order, the company is paid.

Infrastructure businesses have had a rough ride since interest rates started to rise and the value of their investments became less certain. INPP has responded by cutting debts, reducing costs and selling assets to prove their worth.

The group has also committed to increase dividends by about 2.5 per cent a year for the foreseeable future, while making selective acquisitions to fuel returns.

Midas verdict: INPP shares have fallen more than a third since peaking at £1.72 three years ago. The slump has been overdone.

Infrastructure spending is high on the Government’s agenda, INPP has delivered on its promises for nearly 20 years and rival BBGI was recently snapped up by a Canadian pension fund for a hefty £1.06 billion. At £1.10, INPP shares are a buy.

Traded on: Main market Ticker: INPP Contact: internationalpublicpartnerships.com or 07557 676 499