Whether you measure it over the past year, three years, five, or even 10 years, Brookfield Asset Management (BN 0.17%) has been a market-crushing investment. Yet as well as it has done, the global alternative asset manager -- focused mainly on real estate, renewable power, and infrastructure -- has seen its total returns pale in comparison to those of its subsidiary, Brookfield Infrastructure Partners (BIP -1.32%)

And while that's been wonderful for long-term investors in Brookfield Infrastructure, what about someone who's looking to invest today? Does one represent a better value or have better prospects going forward? In short, these companies are on the pricey end of their typical valuation ranges after big jumps in their share prices over the past year, but they're also premium businesses that offer something many investors are craving in the current environment: stability. 

A man carrying a briefcase standing at a fork in the road

Image source: Getty Images.

In that regard, I tend to lean toward Brookfield Infrastructure, placing value in its higher dividend yield as well as a recent sell-off that has discounted it a little more than Brookfield Asset Management. Keep reading for more on both of these excellent companies that deserve consideration. 

The value of "uncorrelated" assets

Fears of the health and economic impacts of coronavirus around the world have global markets in turmoil. The early spread of the disease, called COVID-19, already has investors expecting global oil consumption to fall in the first quarter due to China's effort to arrest the outbreak. 

There are tens of thousands of cases of COVID-19 outside of China now and a near-certainty that the spread will get worse before it gets better. That's why the S&P 500 is down almost 13% from the peak at this writing, under extreme volatility. In the past two weeks, investors have endured both the fastest double-digit market drop in historyand not one, but two days where stocks gained more than 4%.

But even with two of the best days in the past decade occurring in the past week alone, uncertainty and fear are rampant, and the market is down more than 8% year to date. 

So far this year, both Brookfield Asset and Brookfield Infrastructure shares are in positive territory, while the S&P 500 is down.

^SPX Chart

^SPX data by YCharts.

They're also up when the market is down, in part, because large investors understand that these two businesses offer a level of certainty during economic downturns. The assets they invest in and own are often uncorrelated from the stock market, and in a broader sense, more insulated from economic downturns. 

And that makes them attractive investments when things are uncertain, as they are now. 

The case for Brookfield Infrastructure

Brookfield Infrastructure owns and operates major infrastructure assets such as water systems, energy distribution, transportation, and telecommunications. This is the sort of invisible infrastructure that's easy to overlook but critical to modern society. These things are also just as necessary when the economy is crashing as they are when things are booming. 

Management has done an incredible job of utilizing this consistent cash flow and a strong balance sheet to take advantage of opportunities to expand. Few organizations have been as consistently successful at making needle-moving acquisitions over the years that have added to their cash flow and enabled them to further reward investors. 

Since going public just over a decade ago, Brookfield Infrastructure has increased its distribution more than a dozen times, raising the payout an incredible 814%. That dividend, supported by the 705% growth in operating cash flow, is a big reason shareholders have enjoyed a remarkable 674% in total returns since IPO. 

BIP Total Return Price Chart

BIP Total Return Price data by YCharts.

From a valuation perspective, Brookfield Infrastructure isn't cheap. It trades for 15.6 times 2019 funds from operations -- an earnings measure that excludes non-cash depreciation expenses for real estate assets -- and the dividend yield of 3.9% is essentially the lowest in the company's history. 

But with record-low interest rates after a recent Federal Reserve cut sending yield-starved investors looking for safe payouts, and economic uncertainty likely to remain in control of the markets for some time to come, the stock could very well stay "expensive" for a while as investors seek the certainty it represents

Moreover, it's a high-quality business with a management team that knows how to make the most of every part of the market cycle. It's one of the few businesses worth a premium price, within reason. 

Fishing in a much bigger pond

While Brookfield Infrastructure focuses on a more narrow group of asset classes, parent company Brookfield Asset Management casts a much wider net that includes real estate, renewable energy, and credit assets, just to name a few. 

It's not just the asset mix that could make Brookfield Asset Management a better choice than Brookfield Infrastructure, Brookfield Asset Management is also one of the biggest alternative asset investment managers for other investors. The company has almost 2,000 institutional-size clients, including pension funds, insurance companies, very-high-net-worth individuals, wealth funds, and sovereign funds, and it has more than $540 billion in assets under management. 

BAM Total Return Price Chart

BAM Total Return Price data by YCharts.

High-wealth individuals and institutional investors work with Brookfield because its track record of delivering strong results in alternative assets is strong, but maybe more importantly, as CEO Bruce Flatt pointed out on the fourth-quarter earnings call, the company has "historically performed well counter-cyclically." For investors looking to counterbalance their portfolio's exposure to economic cycles, that makes the company incredibly appealing. 

Last year's investment in Oaktree Capital Group (OAK) -- Brookfield spent $4.7 billion in cash and stock to buy 62% of Oaktree -- should further strengthen its ability to take advantage of counter-cyclical opportunities in the future. 

At 24 times last year's earnings and with its dividend yield at barely 1% after a big run-up in the stock price last year, Brookfield Asset Management trades at a similarly premium valuation to its infrastructure-asset-focused subsidiary. 

BAM PE Ratio Chart

BAM PE Ratio data by YCharts.

Its valuation is also similarly likely to stay inflated, in because investors will be looking for a way to diversify away from businesses that are overly reliant on a healthy economy. 

Here's the rub: On a go-forward basis, Brookfield Asset Management isn't quite as expensive, trading for about 20 times expected 2020 earnings. And if we see continued economic weakness, it could actually boost the company's prospects to act advantageously and put investments such as Oaktree to work. 

And the better buy is...

Both. I know, it's not a satisfying answer, and it's not completely accurate: Either is a better way to put it, if you want a short answer.

The longer answer is, it depends on a few individual factors. With a much higher yield, Brookfield Infrastructure is the better dividend stock today, and its prospects for steady growth should lead to regular dividend increases for years to come. 

But if you're looking to capitalize on growth, Brookfield Asset Management gets the nod. Yes, it's a much bigger business already, but it's also more diversified, and management can allocate capital across more asset types based on where the best deals and returns can be found. Moreover, at 20 times expected 2020 earnings, it looks to be a slightly better valuation than Brookfield Infrastructure right now, which is important if you're looking for capital gains. 

You'll have to decide which is the better buy for your portfolio.