2 leading infrastructure ASX shares to consider

Here are two top infrastructure ASX shares to consider.

| More on:
Woman sits at her desk working at night, while traffic flows on a busy freeway out the window behind her.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Infrastructure ASX shares could be a compelling place to find businesses with potentially reliable cashflows and consistent distributions.

Some investments have exposure to long-term tailwinds like energy transition or population growth.

The below two ideas could be ones to consider as leading ASX infrastructure shares:

Magellan Infrastructure Fund (Currency Hedged) (ASX: MICH)

This is a fund that aims to deliver the stable returns offered by the infrastructure asset class, while protecting returns from currency movements.

It has a global portfolio of 20 to 40 infrastructure stocks. Some of the names in the portfolio include Transurban Group (ASX: TCL), Atmos Energy, Excel Energy, Crown Castle, Eversource Energy, Aena, American Tower, Enbridge, Vinci and Sempra Energy.

Looking at the portfolio by the sector exposure, there isn't a large allocation to any particular segment. At the end of July 2021, these were the following weightings: airports (8%), communications (10%), roll roads (14%), rail (8%), energy infrastructure (7%), gas utilities (7%), transmission and distribution (17%), integrated power (18%) and water utilities (7%). The rest of the portfolio is a 4% cash holding.

The infrastructure ASX share defines infrastructure as monopoly-like assets that face reliable demand and enjoy predictable cashflows.

This investment pays out a distribution semi-annually. Over the last three years, Magellan Infrastructure Fund's total returns have outperformed the global infrastructure benchmark by an average of 2.4% per annum, after fees.

It comes with an annual management fee of 1.05% per year.

APA Group (ASX: APA)

APA is a large energy infrastructure ASX share. Its key asset is a large, national gas pipeline that spans more than 15,000km. It supplies half of Australia's natural gas usage.

But it has other assets as well, including gas storage facilities, gas processing plants, gas energy generation and renewable energy (wind, solar and batteries).

The business is always on the lookout for opportunities to invest into more assets which aim to increase its overall cashflow generation. It's the annual cashflow generation that funds the payment of the distribution to shareholders.

It has a 'growth pipeline' of $1.3 billion over the next three years. The business is expecting to pay a distribution of 53 cents per security in FY22, which currently translates to a distribution yield of 7.3% at the current share price.

It's currently in a takeover battle to try to buy Ausnet Services Ltd (ASX: AST). AusNet is one of the largest electricity network operators in Australia, with $11.2 billion of a regulated and contracted asset base, as well as $1.9 billion of annual revenue. It services over 1.5 million customers and has 60,850km of transmission and distribution lines across Victoria, as well as 12,400km of gas networks.

APA is attracted to a few different things about Ausnet. APA likes the predictable earnings and cashflows that it offers, with 94% of FY21 earnings before interest, tax, depreciation and amortisation (EBITDA) coming from regulated businesses. The infrastructure ASX share also points to an attractive organic growth pipeline, with $2.2 billion of total Victorian regulated capital investment to 2027.

If APA is successful with the bid, it would change APA's EBITDA generation. APA generated 89% of EBITDA from gas in FY21. The new split would be 58% from gas, 20% from electricity distribution, 13% from electricity transmission and 9% from power generation, contracted electricity and others.

In summary, APA likes the potential AusNet investment for its potential to unlock long-term growth opportunities in the Australian energy transition.

Should you invest $1,000 in Igo Ltd right now?

Before you buy Igo Ltd shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Igo Ltd wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended APA Group. The Motley Fool Australia has recommended Magellan Infrastructure Fund. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Industrials Shares

Male and female workers at a steel factory.
Industrials Shares

4 reasons this $10 billion ASX 200 stock can keep charging higher into 2026

A leading expert forecasts ongoing earnings growth for this top ASX 200 stock.

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
Industrials Shares

Why this ASX 200 stock could rocket 36% despite Trump tariff headwinds

A top broker forecasts this global ASX 200 industrial share could surge 36%. But why?

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
Dividend Investing

Top broker forecasts this quality ASX 200 dividend share could surge 45%!

A leading broker forecasts outsized gains ahead for this high-yielding ASX 200 dividend stock.

Read more »

Australian notes and coins symbolising dividends.
Industrials Shares

ASX 200 dividend stock reveals next quarterly passive income payout

The ASX 200 dividend stock announced its quarterly results and latest passive income payout.

Read more »

Senior man wearing glasses and a leather jacket works on his laptop in a cafe.
Industrials Shares

A top broker says this ASX 300 share could deliver a 21% return

This business could deliver tasty returns according to one expert…

Read more »

A plumber gives the thumbs up
Industrials Shares

How will Reece navigate Trump's tariffs according to Macquarie?

This ASX industrials company could be uniquely positioned in an uncertain market. 

Read more »

A man reacts with surprise when her see a bargain price on his phone.
Industrials Shares

Why this fund manager likes this beaten-up ASX 200 share

Investors could build good returns with this stock.

Read more »

Young man collecting water leakage in bucket while calling plumber on smartphone.
Industrials Shares

At a 5-year low, is this ASX industrials stock bargain of the year?

With so many ASX stocks in the red, is this industrial stock a buy low candidate?

Read more »