Seven months ago, we spotlighted Macquarie Infrastructure as our Global Income Edge #1 Best Buy, based on its generous yield and potential for a rising stock price. It hasn’t disappointed, hiking its payout by 4% in each of the past two quarters on its way to being one of GIE’s best total return performers in 2015. Despite being income-oriented, shares of MIC climbed as much as 26%, to $88 per share, in June.

In the second quarter, the company’s consolidated revenues rose 50.8% to $423.7 million due to acquisitions and overall improvement in its businesses. And its future continues to look bright.

Although the cash flow of $0.96 per share generated by its four business segments fell short of last year’s $1 per share, this was mainly due to capital spending. Excluding one-time costs associated with its refinancing of its International-Matex Tank Terminals (IMTT) business and its recent acquisition of Jersey-based gas-fired power plant Bayonne Energy Center (BEC), MIC’s free cash flow (FCF) was $1.46 per share, up 46% from last year.

The strong free cash flow generation prompted it to hike its dividend to $1.11 per share, up from $1.07 and this is its seventh consecutive quarterly hike. Its year-over-year dividend increase is 16.8%.

The Core Four

Atlantic Aviation’s second-quarter FCF rose 23.4% to $37.6 million as the segment continued to benefit from the improving U.S. economy and increased air travel. Its business rises along with aircraft flight volumes in the U.S., which were up 1.4% during the quarter and led to 2.5% more takeoffs and landings. Acquisitions of seven airport-related operations made in the past year also contributed to this growth.

IMTT benefited from the acquisition of 50% interest in the business that Macquarie did not already own. Revenues were relatively flat, at $142 million during the quarter, as a reduction in heating revenue was offset by higher storage pricing. FCF came in at $29.9 million, down 7.2% from a year ago. However, adjusted for $31.3 million in one-time fees associated with the refinancing of IMTT’s long-term debt, FCF was up 90.2% compared with last year.

Maintenance capital expenditures (CAPEX) fell 60% during the quarter as the company began to realize some of the $10 million in potential cost reductions it had envisioned last year. IMTT now expects maintenance capital expenditures of about $40 million this year, down from its prior estimate of $45 million.

Hawaii Gas generated FCF growth of 60.1% to $12.5 million due to improved operating results and lower income taxes and maintenance CAPEX, which fell 18.5% during the quarter. Hawaii’s sole gas provider saw volumes rise 3.8% compared with 2014, driven by growth in commercial consumption and customer growth.

In April, Contracted Power and Energy Segment (CP&E) closed on its $720 million acquisition of Bayonne Energy Center (BEC), a gas-fired power-generation facility that supplies power to New York City. Since then the company has paid down the $510 million in debt it incurred under the terms of the deal.

Despite the contribution from the newly minted BEC, the segment did not perform up to expectations due to the weather: less sun and wind due to unusual weather patterns. CP&E contributed a respectable $4.3 million FCF in the second quarter, an increase of 7.2% from last year.

Expenses Take a Toll

While second-quarter FCF growth has been strong, shares slipped 10% in the past week after Macquarie reported a GAAP net loss of $97 million in the second quarter and an expected net loss for the full year. The second-quarter GAAP loss is due to higher costs associated with its operations, which also include $154.6 million paid to MIC’s manager, Macquarie Infrastructure Management.

The increased base management performance fees and general administrative expenses may result in a net loss for GAAP accounting purposes, but management stresses to not focus on GAAP earnings but on FCF generation. FCF growth, which funds its hefty dividend hikes, generated a second-quarter payout ratio of 76%, meaning the new dividend is safely covered.

Since the company pays out about 80% to 85% of its FCF as dividends, it has significant room for potential dividend growth, which investors can expect going forward. Macquarie Infrastructure, with a 5.8% yield is our #1 Aggressive Best Buy up to $90.