Brookfield Asset Management (NYSE:BAM) may not have the same name cache as, say, Goldman Sachs, but the Canadian asset manager boasts an impressive history. With more than 125 years of investing in, and operating, infrastructure on a global scale, this stock and its 3.5% dividend yield should be on your radar screen today. Here's why you might want to buy it before it reports earnings on May 6.
A 15% vote of confidence from Brookfield Asset Management
When Brookfield Asset Management announced fourth-quarter 2024 earnings it also announced that it was increasing its dividend by a huge 15%. This is a clear statement that the board and management believe that Brookfield Asset Management is financially strong and ready to grow.
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In fact, President Connor Teskey noted: "2025 is shaping up to be yet another record year for us. We have a great foundation in place, with well-positioned, diversified fund offerings in leadership positions across the fastest growing areas in the alternatives space." Companies are always cheerleading, looking to put their best foot forward. But you have to consider the 15% dividend increase and an asset management business that has now grown to over $1 trillion in assets under management (AUM). The story is very compelling here.
The company's business position is notable. It operates across the renewable power, infrastructure, real estate, private equity, and credit niches. It is a big player in each. To put some numbers on that, Brookfield Asset Management has $126 billion in assets under management in renewable power, $202 billion in infrastructure, $145 billion in private equity, $271 billion in real estate, and $317 billion in credit. Underneath that it has a number of different ways to raise capital, including a suite of publicly traded entities: Brookfield Renewable (NYSE:BEP)(NYSE:BEPC), Brookfield Infrastructure (NYSE:BIP)(NYSE:BIPC), and Brookfield Business (NYSE:BBU)(NYSE:BBUC).
Growth is expected to be big news for Brookfield Asset Management
As an asset manager, Brookfield is, to some extent, dependent on the market's performance. But downturns can actually be opportunities, since they allow the company to buy assets on the cheap. That's a key part of the approach, which is followed by increasing a business's value through strong day-to-day execution and expansion, and selling appreciated assets if a good price can be had. The process is started over again with the proceeds. This model, which has a contrarian bent to it, has worked well for over 100 years.
And the company's outlook is nothing short of impressive. It expects to roughly double the scale of each of its five main businesses between 2024 and 2029. That, in turn is projected to result in earnings growth from fee-bearing capital of around 17% a year. And that will support dividend growth of 15% a year.
All in, this is both a growth and a dividend story wrapped into one. To be fair, every single year won't be great. And it is possible that the market turmoil so far in 2025 leads to a relatively weak year. After all, Brookfield Asset Management's stock has fallen more than 20% from its peak, which puts it into its own personal bear market. However, that's driven the yield up to 3.6%, which is well more than twice the 1.3% you'd get from the S&P 500 index and the 1.8% you'd collect from the average finance company.
Use the near-term pain to your advantage
If you think long-term, the current stock malaise is likely to be an opportunity to invest in Brookfield Asset Management. One quarter's results won't make or break the long-term opportunity here. However, if the first quarter of 2025 shows that the company is weathering the market turmoil in stride, it is possible that currently worried investors will start to get less worried. And that could change the valuation that Wall Street is placing on this fast-growing asset manager. Buying now, before it reports, will ensure you have a position at the table for whenever investors catch on to the long-term story.
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Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool has positions in and recommends Brookfield Asset Management and Goldman Sachs Group. The Motley Fool recommends Brookfield Infrastructure Partners, Brookfield Renewable, and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
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