While we'd all love to find a stock that could double our money virtually overnight, those opportunities are rare (and often risky). A much more realistic way to find stocks that can double your money is to follow the rule of 72. This quick formula estimates the years it would take for an investment to double, given an expected annual rate of return. You divide 72 by the expected return to get the number of years it would take for that investment to double. 

For example, an investment that can deliver a 12% annual return would double an investor's money in six years. While that's higher than the average stock market return, many companies can deliver returns at or above that level.

Brookfield Asset Management (BAM -1.15%) is a likely candidate. The global alternative asset manager expects to grow its earnings and dividend by 15% to 20% per year through 2028, with the potential for faster growth after that. Because of that, the financial stock could easily double in value by 2030.

A bold growth plan

Brookfield Asset Management is already one of the largest alternative asset managers in the world, with $850 million in assets under management (AUM). It focuses on renewable power and transition, infrastructure, private equity, real estate, and credit. 

The company came public last year after Brookfield Corporation (BN -1.04%) spun off 25% of its asset management business to shareholders to unlock the value of that business. Brookfield's management team believes the market will reward the asset management business with a higher trading multiple as investors see it execute its growth strategy.

However, the company doesn't need a higher multiple to double in value. It expects to more than double the size of its business over the next five years through organic growth. Brookfield envisions its total AUM reaching $2 trillion in five years, while fee-bearing capital will top $1 trillion (up from its current level of $440 billion.

While more than doubling its AUM and fee-bearing capital over the next five years might seem like a lofty goal, Brookfield might be a bit conservative. In 2018, it planned to double its fee-bearing capital by 2023. Instead, it more than tripled it.

Brookfield expects institutional investors, high-net-worth individuals, and insurance companies to continue increasing their allocations to alternative investments in the coming years. Brookfield believes it will draw an outsized portion of this capital into its funds due to its thematic focus on large megatrends (decarbonization, deglobalization, and digitalization). On top of that, Brookfield sees a tremendous opportunity in private credit, driven by the recent turmoil in the banking sector. The industry will grow from $1.5 trillion this year to $2.3 trillion by 2027, according to a forecast by Preqin. Brookfield is in an ideal position to capitalize on this growth thanks to its investment in private credit specialist Oaktree.

On top of its organic growth, Brookfield has the capacity to complete a needle-moving acquisition. It could use its strong cash-rich balance sheet to acquire an asset manager that complements its existing platform. A potential deal would accelerate its already robust organic growth rate.

Powerful drivers

Brookfield currently generates most of its revenues from asset management fees. The company's recurring fee-related revenue will rise as fee-bearing capital grows. Meanwhile, it expects its margins to expand as it benefits from its growing scale and a shift toward more profitable strategies. These factors drive Brookfield's view that its fee-related earnings will more than double by 2028 from nearly $2.2 billion this year to over $4.8 billion.

On top of that, the company will be eligible to earn carried interest (a percentage of a fund's profits above certain return thresholds) on new funds launched after its spinout from Brookfield Corporation. Those earnings could be substantial after 2029 as funds mature and return capital to investors.

Brookfield Asset Management plans to pay out 90% of its distributable earnings to shareholders in dividends. It expects earnings growth to support 15% to 20% annual dividend increases over the next five years, with future upside from carried-interest realizations beyond that. Brookfield's dividend currently yields over 3.5%. The dividend gives investors a visible (and growing) base return.

A clear path to doubling

Brookfield Asset Management believes it will more than double its fee-bearing capital organically over the next five years as more investors allocate a greater percentage of their portfolios to alternatives. That positions the company to grow its earnings per share by 15% to 20% annually over the next five years, which should support a similar growth rate in its dividend. Meanwhile, there's upside to that plan from an acquisition and carried-interest realizations. These factors make it seem likely that Brookfield Asset Management can double in value by 2030. Because of that, it looks like a great stock to buy and hold for the next several years.