It’s often helpful to glance at the key moves made by hedge fund managers when in search of new investment ideas. And right now, many of these savvy investors are buying shares of a behind-the-scenes industrial play.

The company in question: Macquarie Infrastructure Co. LLC (NYSE: MIC), which owns  a collection of assets primarily in the materials and energy sector.

#-ad_banner-#Macquarie Infrastructure’s biggest asset is International-Matex Tank Terminals (IMTT), a company that owns and manages bulk liquid storage facilities on ports and railways. IMTT handles products like petroleum; renewable fuels; vegetable and animal oils; and other chemicals essential to everyday life.

While bulk liquid storage doesn’t sound like a high growth industry, the company has managed to grow revenue 10% and operating earnings (EBITDA) 11% annually over the last two years. In mid 2014, Macquarie acquired the other 50% of the business it didn’t already own, making it the crown jewel of Macquarie’s portfolio.

The firm’s other assets include Hawaii Gas, which distributes natural and synthetic gas on the islands of Hawaii,  and Contracted Power and Energy, which owns controlling interests in five solar power generating facilities, a recently purchased gas-powered energy facility and two wind power generating facilities. These businesses are resistant to recession, and both reliably turn a large portion of revenue into operating earnings.

The fourth and final piece of this puzzle is Atlantic Aviation, a company that handles airport and terminal services such as refueling for private planes. This division is also growing operating earnings at a respectable 13% annual pace over the past two years.

Macquarie has delivered solid operating performance since the financial crisis: management has been doing an excellent job of producing robust and growing cash flows from these assets. That has translated into impressive dividend growth.  

The company has quintupled its quarterly dividend since 2011, with the payout rising to a recent $1.07 a share from $0.20 per share.  MIC has increased the dividend every quarter over the past seven quarters and the stock now yields 5.1%. Even if the stock price were to stagnate, the dividend would richly reward shareholders for their patience.

Macquarie Infrastructure’s management has plans to boost free cash flow and the dividend by 14% per year in 2015 and in 2016. Free cash flow of $1.68 a share in the first quarter trounced management’s initial guidance and was well above the year earlier level of $1.15 a share. In short, I don’t think shareholders will have to be patient to get market-beating share appreciation.

Due to its unique capital structure, evaluating the company on operating earnings compared to its enterprise value is more relevant the traditional price-to-earnings ratio. The company’s valuation using this method is 7.6, well below the average enterprise value-to-operating earnings ratio of traditional utilities or oil and gas distribution companies. The huge growth potential of this company is selling at a discount.

The company is also perfectly situated to weather an eventual downturn in the economy. All of Macquarie Infrastructure’s assets are wide-moat businesses with high barriers to entry, meaning they will still flourish even in a tough economy. The defensive nature of the Macquarie Infrastructure’s businesses limit the downside to investors.

Risks To Consider: As a high-yielding stock, there could be short-term volatility when the first rate hike is announced by the Federal Reserve.

Action To Take –> This is one of the market’s few opportunities for both yield and capital gains. The company is growing operating earnings at double-digit rates and continuing to add assets to the portfolio.

Macquarie is a thriving firm with a reliable dividend, which means now you need a strategy to milk the security for all it’s worth. Our resident income expert Amy Calistri began using The Daily Paycheck strategy to build long-term wealth using dividend payers. Since she began she has earned more than $76,000 in dividends. We, at StreetAuthority, have been so impressed that we urged her to spread the word to a wider audience. That’s why, for the first time, Amy took the stage to explain exactly how The Daily Paycheck strategy works. If you haven’t already, I encourage you to watch the exclusive presentation here. You won’t be disappointed.