Brookfield Asset Management (BAM +2.13%) isn't a household name in the United States, but it is one of the largest asset managers in Canada. However, it isn't focused exclusively on that country, with a long history of investing in infrastructure assets around the globe. The big attraction for dividend investors, meanwhile, will be the lofty 3.4% dividend yield and plans for double-digit annual dividend growth for years to come.
What does Brookfield Asset Management do?
Brookfield Asset Management invests on behalf of others. It collects a fee for providing this service that is based on the value of the assets it manages. Most asset managers report a figure called assets under management (AUM), but Brookfield Asset Management handles a lot of its own money. While it reports AUM, the important number to watch is fee-bearing capital.
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In 2020, the company had around $277 billion in fee-bearing capital, with a plan to double that figure by 2025. In 2025, the company's fee-bearing capital was $563 billion. Mission accomplished, and then some. That amounts to a roughly 15% annualized growth rate in fee-bearing capital, which supported a 15% annualized growth rate in fee-related earnings.
The company has expanded its reach as it has grown. Today, Brookfield Asset Management invests across five major platforms: infrastructure, renewable power, private equity, real estate, and credit. It is a major player in each area where it competes.
Within each area, it is focused on three main themes: digitization, deglobalization, and decarbonization. Management believes that, taken together, these three themes are a $100 trillion opportunity. Given the size of its fee-bearing capital, it appears that there is plenty of opportunity for growth ahead.
Brookfield Asset Management's big plan
The fact that Brookfield Asset Management successfully executed its plan to double the size of its fee-bearing capital between 2020 and 2025 is noteworthy. It suggests that investors can trust what management says. The next big goal for the asset manager is to double fee-bearing capital again by 2030, bringing the sum to roughly $1.2 trillion. Having achieved this same goal once, it isn't unreasonable to think that Brookfield Asset Management can do it again.
For dividend lovers, meanwhile, the big story is going to be the attractive combination of yield and dividend growth that Brookfield Asset Management's business growth could offer. The 2025 dividend hike was 15%. The plan is for the growth in fee-bearing capital to lead to annualized growth in fee-related earnings of around 17%.
NYSE: BAM
Key Data Points
The company's growth should be more than enough to support a string of double-digit dividend increases along the way. If dividends continue to expand at 15%, the dividend would roughly double within five years.
From this perspective, Brookfield Asset Management is a dividend growth stock. However, this dividend growth opportunity comes with a current dividend yield of 3.4%. All in, this is a growth and income play that will appeal to more than just dividend investors. For reference, the yield of the S&P 500 (^GSPC +0.54%) is a rather tiny 1.2% right now, so that 3.4% yield is particularly attractive at the moment.
An important caveat
There's one small wrinkle that all investors need to consider with Brookfield Asset Management, and that's its inherent reliance on Wall Street. If there is a bear market, the path toward doubling fee-bearing capital will likely be harder to achieve. However, a bull market would make reaching the goal easier.
Like most asset managers, Brookfield Asset Management's stock price and business performance will fluctuate with the market. If you can handle that uncertainty, however, this Canadian financial giant could be a solid addition to your portfolio.
