Brookfield Corporation (BN +0.07%) has been a wealth-creating machine. The leading global investment firm has delivered an 18% compound annualized return over the past three decades, absolutely crushing the S&P 500 (^GSPC 0.24%) (11% annualized return).
The company's best days could be ahead. Here's one reason why I believe the stock will soar over the next five years.
NYSE: BN
Key Data Points
Wealth solutions could be key to growth
Brookfield Corporation held its annual investor day late last year, laying out its five-year plan. It estimates it can grow its earnings per share by more than 20% annually over that period. That drives its view that the company should be worth over $175 per share by 2029. That's significantly above its current sub-$60 share price (and $84 in-house valuation).
The company has multiple growth drivers. However, the biggest expected contributor to its growth (33% of its anticipated distributable earnings growth) is expansion of its wealth solutions platform.
Four years ago, Brookfield's wealth solutions business had about $4 billion of insurance assets under management (AUM). Today, that business manages more than $110 billion of insurance assets. It built that business through a series of acquisitions, including American Equity Investment Life ($4.3 billion in 2023), Argo ($1.1 billion in 2023), and American National ($5.1 billion in 2022). These catalysts have helped grow the business' earnings from next to nothing five years ago to around $1.4 billion per year, with a clear line of sight to $2 billion in the next two years.
Brookfield Corporation expects to nearly triple the size of its wealth solutions business over the next five years, to around $300 billion in assets. That sets this business up to triple its earnings to around $4.8 billion by 2029. The company has several growth catalysts, including its U.S. annuities business, the U.K. pension market, annuities in Japan, and European expansion.
Achieving that growth will add an estimated $23 in value to the company's share price by 2029. Combine that with its other growth drivers, and Brookfield's stock seems likely to soar over the next five years.
